This is the speech given by Ian Jones, Managing Director of Mercedes-Benz Commercial Vehicles UK, at the firm's annual commercial vehicle press conference yesterday:
Ladies & Gentlemen
Firstly may I extend a very warm welcome to our annual commercial vehicle press conference. Welcome also to Mercedes-Benz World here at Brooklands.
An impressive building, I’m sure you will agree, and a very significant investment by our organisation to demonstrate to our passenger
car customers the strengths and values of our brand.
Similar Brand Centres have been built in some of the commercial hubs around Europe and indeed, in other parts of the world, and with the UK being one of the most important markets for Mercedes-Benz, it was always a question of "when and where", not "if".
As you can imagine, finding a suitable area of land near a major population centre in the UK, is not easy. And so the site here at Brooklands – 155 acres within the M25 Motorway, between the two major London airports and within a one-hour drive of 9 million people – makes this an ideal location for the Mercedes-Benz Brand Centre for the UK.
And being built on the site of the original Brooklands race track added a special something to that investment. Brooklands was the first purpose-built car racing track in the world, holding its first race in June 1907.
And that first race, for the Montagu Cup, was won by a Daimler-Mercedes with a Benz placed
second on the day.
So to open this new building in November 2006, on the 100th anniversary of the Brooklands circuit, was a great way to start the second century of this important location for the motoring industry.
On this site we have 2 kilometres of handling circuits, a wet skid circle and a wet straight, multiple road surfaces and 15 acres of off-road experience – which is a lot more demanding than it might appear when you drive past on your way in.
And of course we want to welcome as many people as possible to this facility. We are on track to receive 300,000 visitors this year and to support that, we have extensive exhibition halls, meeting areas and catering facilities, as well as special provisions for children.
But this is also a working, breathing dealership with a full range of sales and after-sales facilities. Many of our customers bring their car here for servicing while enjoying the facilities of the Brand Centre. And we have already sold over 1,800 new cars since we opened for business just a couple of months ago.
And of course let’s not forget our next door neighbour, the Brooklands Museum, with whom we work in close association, to ensure that the valuable history of Brooklands is maintained.
But apart from the Mercedes-Benz Viano, our 7-seat, top of the range MPV, you won’t see too many commercial vehicles driving around Brooklands – but it’s Commercial Vehicles that welcomes you here today and Commercial Vehicles that we want to talk to you about over the next hour.
This has now become our traditional pre-Commercial Vehicle Show Press Conference – giving you the opportunity to understand what we plan to exhibit at the all-important Commercial Vehicle Show at Birmingham, but also to give you more understanding of what’s going on within the Mercedes-Benz Commercial Vehicle business, and the time to ask whatever questions you wish.
Joining me today are my colleagues:
Steve Bridge – Director of Van Sales & Marketing
Nick Blake – Truck Marketing and Sales Engineering
Liam Ilbury – Director of Customer Services
Adam Slater – Used Commercial Vehicles
Matthias Klemens – DCAG Truck Sales
It’s important that you get to know us and we get to know you and that we have an ongoing, productive and open dialogue – and I hope that you’ll all agree that that’s the style that we’ve achieved in recent years -with this Press Conference being the highlight of our year together.
But of course it’s not all business, we’d like to have some fun as well – no raw eggs or paper planes tonight, but we still have some ideas to have some competitive fun together – but more of that later.
I know that by the time we meet in March you’ve already had a belly full of market analysis, statistics, market shares and different manufacturers quoting the numbers to their advantage, so we won’t do much of that tonight.
Suffice it to say that DaimlerChrysler had a good year last year, increasing its operating profit from nearly 5.2 billion to just over 5.5 billion Euros. That was despite a decline in earnings within the Chrysler Group – which of course is very much in the public eye at the moment – but more than compensated for by an increase in earnings within both the Truck Group and Mercedes Car Group.
Total Group sales were 4.7 million vehicles, generating total revenues of over 151 billion Euros with an impressive R&D spend of 5.3 billion Euros – big numbers!
On the 1st of August 2006 DaimlerChrysler reorganised its Commercial Vehicle business, establishing the DaimlerChrysler Truck Group, with responsibility for 3 operating units:
- each of which is responsible for production and sales operations in its respective regions.
At the same time our very successful Van business established its reporting lines through the Mercedes-Benz Car Group, reflecting the significant benefits gained from within our Van business from shared componentry and drive lines utilised within our passenger car products.
The Truck Group achieved a new sales record of 537,000 vehicles, with revenues of 32 billion Euros – an increase of 5% year-on-year – and an operating profit of just over 2 billion Euros, up 20% year-on-year.
And when you combine that significant operation with our Van business, we sold 794,000 commercial vehicles around the world in 2006 – re-affirming our position as the clear number one manufacturer of trucks and vans world-wide.
Sitting here in Mercedes-Benz World, it’s easy to fall into the trap of thinking of Mercedes-Benz as a passenger car company that also makes vans and trucks – and yet in 2006 the commercial vehicle businesses of DaimlerChrysler employed more people, and contributed more to the corporate coffers than any other part of our total business.
But I don’t think I’ll be building one of these instead of my office in Milton Keynes!
Incidentally – I’ve given you the headline numbers, but if you’d like those numbers in more detail, then these can be provided by Ian Norwell.
So what have we got to show you at the Commercial Vehicle Show this year?
Well, I think I’ll leave the description of our new products and our stand to Nick Blake and Steve Bridge respectively.
Perhaps I could just take this opportunity, therefore, to share with you a few observations of our industry and also tell you about some new services that we will be launching at the Show.
I call 2006 "the year of legislation". When you look at the two massive peaks of demand that occurred: around April, as customers sought to avoid digital tachographs, and then in September, as customers avoided investing in Euro 4 technology – you can understand that last year proved to be one of the most difficult to plan and manage from a business perspective.
And while manufacturers have spent most of their time talking about Euro 4, from a customer perspective, digital tachographs had far more impact.
Even today, less than 25% of all LGV licence holders are legally able to drive a vehicle with a digital tachograph. And that is having a big impact both on the rental industry and acting as a brake on companies wishing to implement fleet change.
Last year John Baker criticised you, the CV Press, for not communicating the tachograph issues more fully – but I think it’s a criticism that we should be levelling at our entire industry.
Digital tachographs were in discussion for 15 years before they finally became part of commercial vehicle operating legislation, and despite the on/off, on/off changes that preceded introduction, the implementation hit us like an express train.
Of course, the other big issue for 2006 and even today, is the SCR versus EGR debate.
As a manufacturer, we’d like to think we hold a balanced view, since of the commercial vehicles we sell in the UK, roughly two thirds use EGR and one third SCR, and we have adopted a "horses for courses" approach.
Put simply, SCR is more expensive to install – but delivers significantly better fuel consumption.
In operations where the total benefit of fuel saving outweighs the cost of SCR, we follow the AdBlue route – and in those cases where total fuel cost doesn’t justify, we have adopted EGR.
But of course that’s not always good copy and everyone likes a good fight. So the idea of different manufacturers venting their spleens – sometimes too publicly – must have seemed like Christmas had come early for some of you.
I am not going to pour petrol on those flames today. In my opinion, this is an over-egged pudding and in my experience, most customers don’t really care. They just want a vehicle that will achieve Euro 4 and give them the best overall operating costs.
And with a 30% derogation on Euro 3, it’s true to say that there are still relatively few SCR or EGR Euro 4 vehicles operating on UK roads today – and even fewer being operated in controlled conditions that can provide real fuel consumption data.
For customers it’s a bit like drum brakes and disc brakes – provided the vehicle stops, they don’t really care. And therefore customers have been more focused on price than on the technology path to Euro 4 – and my suggestion to yourselves would be that it would be naïve to believe that any significant change in market share or performance has anything to do with EGR or SCR - rather than the determination of individual manufacturers to secure market share or alternatively, to protect their profit performance.
Our judgement remains that in heavy trucks, SCR delivers a significant fuel benefit in a like-for-like operation.
Big advertising budgets and campaigns that suggest AdBlue is difficult to handle and store, are merely diversionary tactics. I suppose what does surprise us however, is that whenever MAN or Scania sell a truck these days, it’s often reported as being because the customer has chosen EGR, whereas if DAF, Volvo, Mercedes, Iveco etc have a press release published, it’s because the customer has chosen a DAF, Volvo, Mercedes, Iveco etc.
The truth is that in many of the recent deals where EGR has been cited as the reason to buy, the customer has given the other half of the order to SCR equipped trucks. Yes, Hill Hire has taken EGR MANs, but they have also ordered 100 Mercedes tractor units and taken DAFs as well, both using SCR technology. Ditto Colin Carter down in Suffolk, he is taking both technologies too.
The fact is that many operators are backing both technologies to see for themselves which is best for them.
As someone once said: "I used to be paranoid, but now I’m convinced everybody hates me!" This is just a plea for a quick telephone call to the customer before you write the story. It will get you the other half of the picture and give us all a balanced view.
Of the 53 road tests carried out on tractor units in major commercial vehicle magazines throughout Europe, all bar one of those tests has concluded that an SCR-equipped vehicle has been the front runner in fuel performance.
In the Commercial Motor 1,000-mile Test – which I have to say was conducted under the most rigorous and scrupulous of conditions – the 4x2 sector was won by the Mercedes-Benz Axor, achieving 8.5 miles per gallon. In the 6x2 category, Mercedes-Benz came second with a 460 horsepower high roof Actros Executive Cab, beaten only by the MAN, utilising a narrow low cab fleet specification.
With hindsight, perhaps we could have put the Axor 6x2 into that frame as well, since people remember the result rather than the runner. Nevertheless, an extremely creditable performance from the Mercedes-Benz stable.
However, as I have said before, only time – and operator experience – will tell.
But of course, if our government provided incentives to our industry to make the step to Euro 5, as experienced in other European markets, this debate would not exist. The reintroduction of an RPC – an environmental gesture that has one of the biggest bangs for its buck – would see tractor operators rapidly switch from Euro 4 to Euro 5, to take advantage of this minimal support – and the whole EGR/SCR issue would go away.
Alternatively, enhanced capital allowances, familiar to the UK government and in use in the EU, would encourage all commercial vehicles to move to the latest euro standard and not just tractor units that perhaps have a lower impact on urban air quality.
Of course all this debate will eventually become some ironic piece of CV history, as the likelihood is that all manufacturers will use a combination of SCR and EGR to achieve Euro 6, which we anticipate being only 5 years away.
When I spoke to you at this event last year, I suggested that VOSA – with their limited resource – should consider directing that limited resource more at enforcement, because the commercial vehicle industry was more than capable of fulfilling the role of vehicle inspections and testing.
That wasn’t meant to be an attack on VOSA, merely an observation - that in any other industry you would outsource what others can do well, if you have limited budgets and too many demands on your time and money.
I was quite surprised by the strength of reaction – both positive and negative – that I received from operators, commercial vehicle dealers and manufacturers, government offices and VOSA themselves.
If nothing else, it started the debate - and with no help from me, it seems that opinion seems to be swinging down a similar path.
Mine’s a simple philosophy. Rather than have a culture of regular maintenance and then an independent party inspect their work annually – with the result that the pass standard may only exist for one day a year – is it not better that the body responsible for maintenance is required to maintain to a pass standard at all times? Therefore, maintenance, inspection and test all become one process.
Let’s face it, the UK is no soft touch. I know of no other market that requires its vehicles to be inspected for two hours every 6 to 12 weeks; undergo an annual comprehensive test; requires all maintenance and inspections to be fully documented and recorded; and the operator is required to have an operator’s licence, against which any infringements are recorded – even if the operator is not responsible for the maintenance of the vehicle.
So it’s against that back drop that I would like to announce the first of two major innovations that will be introduced by Mercedes-Benz and displayed at the Commercial Vehicle Show at the NEC.
The first of these is Truckfile, the Electronic Inspection Sheet.
Truckfile is the digital capture of all vehicle and trailer maintenance records, enabling any appropriate party to access those records via the Internet and to download files either to paper or to a database, which is accepted by Ministry inspection.
Maintaining commercial vehicles is a time-consuming task that must be professionally carried out for operators to remain both safe and legal.
The image of our industry is so often judged by a single error or omission in service work. Recent events with Network Rail should make us all sit uncomfortably with our responsibilities.
Most of our customers would like to be relieved of the paperwork and the administrative headache that goes with it.
A hundred strong truck fleet generates about 900 DOE inspection records a year with each one requiring an 80-point check list – all manually carried out by a technician and all needing to be copied, stored and mailed to various parties. There are then issues of legibility, with tick boxes being omitted, security and storage and retrieval of documentation.
The Mercedes-Benz commercial vehicle service network will put these issues to an end by bringing all service work into the realms of the PDA – Personal Digital Assistant. By the end of April, the new EIS system, managed by our partner Truckfile, will have been rolled out across all 91 sites of our commercial vehicle service network. We currently carry out over 270,000 DOE inspections a year, so we know how big the problem is and how desperate a "back to basics" approach is needed.
From the end of April each of our technicians will dispense with the oil-stained check sheets and they will carry a PDA on which he or she will enter all the DOE, maintenance and repair work for upload to the dealer’s management system. This data will then be held on a secure central server as a permanent and complete record of all work carried out and will be instantly accessible to the operator, the dealer and anyone with a legitimate right to see it.
Most importantly, this has been approved by VOSA and will remove the spectre of an O Licence infringement caused by either an administrative error, or incomplete records.
This system has been under test within our network for the last 6 months, which has allowed us to ensure that the logical practicalities of service and inspection routines are sympathetic to technicians’ needs and known pitfalls are ironed out.
Prompts and triggers ensure that nothing is missed and the inspection sheet cannot be closed down until all required fields are complete.
It also has the facility to add digital photographs, to provide more comprehensive records where required.
Rescheduling inspections – currently a minefield with onerous and expensive knock-on effects – will be automatic.
And also it can be tailored to individual customers’ needs and can include all makes of truck and their trailers.
Apart from instant access and improved storage, operators will benefit by saving hours of time currently spent clearing down paperwork, making phone calls and chasing duplicate copies that could be lost in the post.
And all of this will be available for an annual fee of £85 and £2.50 per upload. And it is unique to Mercedes-Benz.
We are absolutely convinced this will provide real benefits to our customers and therefore, we have taken the decision to include Truckfile with all Repair & Maintenance Contracts that have been initiated since January 1st.
I am very proud to be associated with such an important step in the efficient provision of maintenance for our customers and I know this service will provide a huge benefit, particularly to multi-site fleet operators who sub-contract their maintenance programmes, as well as to the smaller operator who struggles to provide the dedicated resource necessary for maintaining the paperwork trail for which his Operator’s Licence makes him responsible.
And it’s in the After-sales area that we are also launching a second initiative, which we also believe will make a big difference to our ability to provide quality support to our customers.
Vehicles break down. Yes, it’s true – not too often, but when it does happen, it’s a big headache for any commercial vehicle operator.
Replacement vehicles are of limited value when you’ve got a 25 tonne load to ship, or specialised handling equipment. What our customers want is a rapid response, wherever possible the vehicle repaired there and then and to be back on the road as quickly as possible. And therefore our second programme, which we call PULSE, is aimed at that.
We put a lot of resource into ensuring that Service 24h responds quickly. A dedicated European Call Centre in Maastricht, 150 dedicated, comprehensively equipped vans throughout the UK and 1160 technicians trained to diagnose and repair as quickly as possible.
But at present we respond to a breakdown request by allocating the work to the dealer nearest to the breakdown. But the truth is, that doesn’t necessarily provide the best answer.
PULSE allows us now to allocate the work to the van that is nearest the breakdown, that is available, or will become available in the shortest period of time.
Knowing where all of our Service vans are and knowing their status and availability, doesn’t seem like rocket science, but it has been something that has previously been difficult to achieve in any Commercial Vehicle network with multiple ownerships and multiple systems.
Again, using a PDA – we must have got a bulk deal on these – the technician will accept a case, provide updates, capture defect codes and provide electronic time records and printed histories, and ultimately close cases down – all with the PDA.
This will allow the case handler time to call customers and keep them updated with the information that the Control Centre will have on screen, with all dealers also having full visibility of the process. We have been testing this system since last July to ensure that when we launch at the Commercial Vehicle Show, this is a working proven system that will make a real difference to our ability to support customers. And represents a significant investment by both Mercedes-Benz and our dealer network, to ensure that we are at the forefront of a fast and efficient breakdown service.
Well I hope that has given you all food for thought and a good overview of where we are going as a company.
Thank you.
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