bharatbenz final

FIBRESResearch

Daimler presents ‘BharatBenz’ for India

The new entrant in the Indian CV marketThe new entrant in the Indian CV marketThe new entrant in the Indian CV marketThe new entrant in the Indian CV market

FIBRES Research (CVBU) December 2011

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ForewordForewordForewordForeword

� India has been standing tall among the global ruins ever since the world was hit by the financial tsunami in 2008. Post the 2008

crisis, Indian truck market galloped with high rates of growth partly due to low base but largely due to genuine demand for

commercial vehicles (CVs) propelled by robust economic growth.

� Given the abysmal growth rates as recorded by the global CV markets, the world’s largest CV maker (above 6 tonne category),

Daimler AG decided to land on the shores of the Indian market to forge a partnership with India’s Hero Group in 2008.

� However, due to the economic uncertainty arising due to 2008 crisis, Hero Group withdrew from the joint venture in 2009 and

Daimler decided to go solo in the Indian market, though it was not initially willing to part ways! It also realized that that just by

assembling the completely knocked down (CKD) kits of trucks will not help it to get a strong foot hold in the fast emerging world’s

one of the largest CV markets.

� Post the split and this realization, Daimler went into a huddle to have a re-think over its India strategy. Given the attractiveness of

the Indian market, it decided not to quit India and take the split as a blessing in disguise. With this positive attitude, Daimler

devised a fresh strategy and thereby decided to give birth to an altogether new brand specifically for India, something it has never

done before.

� On February 17, 2011, Daimler revealed its new brand and logo, ‘BharatBenz’, to the amazement of everyone. Under

BharatBenz, Daimler strategized to build India business from scratch – a very bold step of which it had no experience to fall back

on or a blueprint to refer to!

� With a determined mind, Daimler went about revealing nuggets of its strategy – India pricing, stripped-down versions of global

truck platforms, end-to-end India manufacturing, high levels of localization, developing ‘Services’ as a strong business etc. which

made many CV makers to sit up and take notice. And coupled with its strong ‘Benz’ brand recall in India, it looked like a serious

competitor emerging on the horizon. This made it imperative to have a deep dive into Daimler’s India Strategy under the garb of

BharatBenz and be prepared to welcome the new entrant with a proactive mind.

In the light of this, we welcome you all to read about the story called ‘BharatBenz’…

The story called ‘BharatBenz’

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Contents of the report

38SOWT analysis of BharatBenz11

39Conclusion – What Tata Motors should do?12

28Pricing Strategy of BharatBenz trucks7

29Network planning Strategy8

30-35BharatBenz’ After sales model & IT strategy9

36-37Implications – Emergence of the ‘new middle’ market10

22-27BharatBenz Product and Aggregates Strategy6

18-21BharatBenz’ Manufacturing and Sourcing Strategy5

14-17BharatBenz’ Leadership Team and the Advisory Council4

12-13Leading the paradigm shift – Inception, Vision, Values & the Brand3

10-11Strategic intent of Daimler India CV – birth of a new brand2

4-9The Paradigm Shift1

Page nos.TopicsSr.No.

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The Paradigm shift!!

India is changing – As India grows to be a an

economic super power, it will witness a paradigm

shift in the consumer behavior which will in turn

lead to a shift in product offerings…

…Daimler intends to ride on this paradigm shift

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Over the years, our experiences have evolved for the better,

enabled by innovation all through

Music on the move

Converse on the move

Click in a giffy

Gateway to a virtual world

Communicate on the move

+

+

+

=

The ALL in One

Consumer is the first beneficiary,

Organizations who innovate for this

consumer create immortal brands

Innovation has driven change and will now lead to the paradigm shift…

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Customers & Users drive this shift ; Organizations which are

able to foresee this enjoy long term ‘differentiation’

Quality

Accessibility

Serviceability

Technology

Sustainability

Product Experience

Superior Products, Innovation are a necessary condition, but will not be a

sufficient condition for “Brand Differentiation”. Consumer experience will

play a bigger role as product differentiation will cease

Reliable

Competent

Convenience

One Stop solution

Life cycle

involvement

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The Auto Industry too has kept pace; and so focus should

now shift to Customer & Consumer Experience…

Convenience of

Reach

Any time

Service

Skilled

Manpower

Products have changed Retail infrastructure has changed

Need to focus on ‘Consumer Experience’

– Product Brand needs to complement the Retail Experience

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Dealerships’ paradigm is set to change as it faces the OEMs

and the customers – and both are changing at a fast pace

Change is the only CONSTANT

� Limited choice

� Premium Driven

� Limited Access to Information

� Limited financial leverage

� Inadequate infrastructure

� Less Competition

� Little investment in innovation /

change

� Less Customer Focus

� Production Driven

� Little regulation

� More demanding

� Value driven

� One World – No time lag between

developed and developing economies

� Boom in business as financing paradigm

changed

� High pace of infrastructure change –

Roads, Ports, etc.

� Global leaders drive competition

� Latest technologies – harness global

strengths

� Concepts like CRM and 24 X 7

� Demand Driven

� Highly regulation driven – Emission,

safety etc.

Cu

sto

mers

OE

Ms

In India, we have examples of paradigm shifts in many spheres

IT industry – Telephony – Health Tourism – BOT roads – Micro finance – Small Cars

All of the above show that ‘leap-frog’ against ‘natural progression’ itself is a paradigm shift

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Success of same products varies across locations. Today it

has become imperative for the Network to deliver on..

MANPOWER

Quality, Skilled and

Employability

MANAGEMENT

Professional and

Transparent

BEST PRACTICES

Ethics &

Compliance

CUSTOMER

Satisfaction &

Retention

LOYALTY

Loyalty towards

experience

Internalize learning and leverage it across businesses

Build brand equity to attract and retain talent

Participate in skill development of the country

Mirror customer expectations to the OEMs

INFRASTRUCTURE

Reach & Coverage

World Class

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Inspired by this impending change, Daimler plans to challenge

established conventions and induce shift

PRODUCT OFFERINGS

NETWORK APPROACH

CUSTOMER ENGAGEMENT

SYSTEMS & PROCESSES

World tested, reliable products made affordable

to Indian Mass Market

Look at long term partnerships. Lead the desire

of partners to grow.

Participate with the customer in his entire

business lifecycle

Processes to enhance workflow reliability and

“Zero” defect operations

The Strategic Intent of Daimler AG for India – 4-pronged approach

Introducing BharatBenz for India

– thereby establishing 5th brand in its global truck portfolio

HOW??

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India gets special importance

– Birth of a new brand especially for India

Till recently, Daimler Trucks were manufactured and sold under its 4 major brands globally –

Mercedes-Benz, Freightliner, Western Star and Fuso. Recognizing India’s potential, it created a

new brand ‘BharatBenz’ especially for the Indian market in 2011

++++Daimler’s

Global Truck

Brand portfolio

Given the uniqueness

of the Indian market,

Daimler recently

introduced a new brand

‘BharatBenz’ especially

for the Indian market

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Leading the

Paradigm shift!!

How Daimler plans to execute

its strategic intent??

Here we go…

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Introducing Daimler India Commercial Vehicles (DICV)

– Inception, Vision, Values and the Brand

Daimler AG incorporated Daimler India Commercial Vehicles (DICV)

in 2008 in order to build its trucks locally in partnerships with Indian

suppliers

Vision

Delight customers

and transform the

Indian CV industry

Daimler initially entered into a JV with Hero Group in 2008 with 60% stake by Daimler and 40% by Hero

Group. However, due to recession in late 2008, Hero Group withdrew from the JV, leaving Daimler to raise its

stake to 100%, thereby converting it into a wholly-owned subsidiary.

Backed by Daimler’s legendary technological standards and an in-depth understanding of the Indian truck

market, Daimler India Commercial Vehicles (DICV) intends to build a robust, reliable and performance-oriented

trucking solutions for the Indian market. And these trucking solutions will be launched under a newly created

brand ‘BharatBenz’ – signifying Benz technology meshed with Bharat’s market insights.

Values

Passion, Respect,

Integrity, Discipline

and Fairness

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The BharatBenz Leadership Team

Functions related to ‘Product Engineering’

and ‘Procurement & Logistics’ are headed by

the Germans, whereas the other key local

functions like ‘Sales & Marketing’, ‘Finance’,

‘HR’ and ‘Manufacturing’ related areas are

headed by the Indians – thereby trying to

mesh German engineering expertise with

Indian market knowledge and experienceMarc Llistosella

Managing Director & CEO

Erich NesselhaufVice President

Procurement,

PSSM & Logistics

Aydogan CakmazVice President

Product

Engineering

Vijay TuliVice President

Production

Engineering

VRV SriprasadVice President

Marketing, Sales

& After Sales

Sanjiv KhuranaChief Financial

Officer

T. NarayananVice President

Human Resources,

Legal & Compliance

Headed by Germans Headed by Indians

Daimler has about 400 employees on its

rolls which includes both the nationalities –

Germans and Indians. Additionally, it

employs about 500 engineers in its R&D

centre which it plans to double by 2013.

By the time the plant is ready, the

company’s total headcount is likely to touch

about 3,000.

Daimler India Commercial Vehicles (DICV) leadership team comes with

a diverse mix of global expertise along with local market insights

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Who are these guys??

– Background of Daimler’s India Leadership Team…

Sanjiv Khurana (Chief Finance Officer)

� Earlier worked with ‘Freightliner’, Daimler Trucks as GM – Finance & Controlling ( 1½ years), Finance

head for the Aftermarket and Specialty vehicles business of Freightliner, including Thomas Bus and

Freightliner Custom Chassis. Responsible for M&A projects and transactions.

� Besides this, he has worked at American LaFrance, Delphi etc. with about total 20+ years of workex.

� Has an MBA, Finance, General Management (The University of Chicago - Booth School of Business),

MS (Engineering) from University of Michigan

VRV Sriprasad (VP – Marketing, Sales and After Sales)

� Earlier worked with Eicher – in the Marketing Division for about 23 years before joining Daimler in 2008

� Has a BE Mechanical degree from Coimbatore Institute of Technology

Vijay Tuli (VP – Production Engineering)

� Worked earlier at M&M Ltd. – as Senior GM (Operations)

Based on the available information, we have drawn up the background of

the key senior managers of the Daimler’s India Leadership team so as to

know their key strengths and expertise…

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Background of Daimler’s India Leadership Team (contd.)…

� Expertise in all functions of supply chain like Strategic Sourcing, Contract Management, Supplier

Assessment and Development, Supply Chain Design and Quality Assurance, Project Management

� Member of Executive Committee at Daimler India Commercial Vehicles Pvt Ltd

� Member of various cross functional executive committees at Daimler India giving exposure to

manufacturing, production planning and site readiness, labor and work force management and policy

making, Product Planning and execution of product related strategies

� Member of Daimler Trucks Global Purchasing Management Team with responsibility to define and

implement global procurement processes and policies, performance management and tracking, emerging

market sourcing guidelines and ensuring Code of Conduct at all purchasing offices of Daimler Trucks &

Buses

� Functional specialties

- Global Sourcing

- Procurement & Supplier Development

- Supply Chain Design & Management

- Project Management

- Supplier Relationship Management

- Green Field Projects

- Partnership and Alliance Management

- Organization Development & Human Resource Planning

� Graduated with Business Economist degree

Erich Nesselhauf (VP – Supply Chain (Procurement, Supplier Management & Logistics)

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And to support the Leadership team, Daimler has formed a

5-member Advisory Council in India…

Mr. Baba Kalyani

Chairman & MD

Bharat Forge

Mr. Lakshmi Narayanan

Vice Chairman,

Cognizant Technology

Ms. Renu Karnad

Managing Director

HDFC Ltd.

Mr. Arun Ramanathan

Former Finance

Secretary

Mr. P.S. Raman

Advocate-General,

Tamil Nadu

Daimler’s Advisory Council for India

Daimler India has put together a 5-member Advisory Council in India, which includes the following

eminent people. The advisory council will be a sounding board for Daimler’s Board Members on issues

like truck financing, questions on suppliers, market reach and so on. By setting up this panel, Daimler

is following the footsteps of other global MNCs such as Microsoft, Siemens, Bosch and Novartis in India.

A far-sighted step…

The panel members represent a diverse expertise in the fields of Financing, Law, IT, Government relationships

and Supplier relationships. This panel consisting of the leading luminaries of India Inc. is expected to familiarize the

Daimler’s Management team with the Indian business climate, its regulatory environment and the relationships.

India will also house Daimler's ‘TOS’ experts for South East Asia.

Truck Operating System or TOS is Daimler equivalent of Toyota's

Kaizen (or improvement) approach. These TOS experts would work

with Indian suppliers in effecting dramatic efficiency improvements.

Establishing ‘TOS’ Team for India and South East Asia

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Manufacturing and sourcing strategy

Production plan as indicated to the vendors

6,000

28,000

48,000

-

10,000

20,000

30,000

40,000

50,000

2012 2013-14 2015-16

� Location: at Oragadam, near Chennai

� Area: ~400 acres of land area

� Capacity: Maximum manufacturing capacity of 70,000

vehicles p.a.

� Phases: Production at the plant will be defined in a

two-phase concept, with first phase to have ~36,000

trucks in 2012

� Also has a high quality painting and finishing line

� Test track – Consists of test track spread over ~47

acres which was inaugurated in May 2010. (Refer

page 25 for details)

Manufacturing Strategy

Some critical components would be manufactured or assembled in-house and most of the other

components will be sourced from Indian suppliers or global suppliers who have established production

facilities in India. Nearly 12-14% of the manufacturing / assembly operations will be done in-house and the

remaining will be sourced from established vendors.

Supplier base:

The supplier base presently stands at around

200 and it is likely to go up to 430. Two key

suppliers — makers of frame and sheet

metal parts will be housed within the factory.

Localization plans:

85% from start which

includes frames, axles,

engines and all other

major aggregates.

Engines:

The engines for the light and medium duty trucks

will be contract manufactured and the ones for

the heavy duty trucks will be manufactured in-

house at the DICV facility at Chennai.

Sourcing Strategy

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Bird’s eye-view of Daimler’s manufacturing facility in

Chennai, India…

Artist’s impression

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3-lane outer elevation track

The cobble stone bump track

Articulation & pothole test track

Daimler planned its third global test track in India with Indian

road conditions in mind – implies its seriousness for India

Presently has two different tracks with one to be added in future:

� The three-lane outer track has a total length of 1.55 kilometers

which is equipped with a noise pad and a jump section and is

specially designed for testing the power train and driving noise

� The two-lane inner track is 1.16 kilometers long and includes a

variety of India-specific poor road features like bump track,

pothole testing and articulation sections. This track offers special

testing opportunities, including a water trough, a dusty road and

poor road surfaces.

� Facilities for testing gradeability and steering will be added in the

near future

Spread across 47 acres, the test track was inaugurated in May 2010.

This test track is prepared as a testing hub and provides Daimler to

thoroughly test its trucks for South Asia. The other major tracks are

located are at Woerth, Germany and Kitsuregawa, Japan

Track for South Asia, but built in India

Marc Llistosella, the MD sees the test track as the successful product of German and Indian

collaboration. “Numerous customer studies and measurements were considered during the

construction of the test track to ensure a realistic simulation of the road conditions in India.

Our trucks will have to undergo a variety of tests to offer our customers high standards of

product performance.”

The intent – specially made with Indian conditions in mind

3 tracks to test all types of road conditions

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A picture is worth 1000 words!

BharatBenz models being tested on the new test tracks…

� Daimler claims that its trucks have already clocked 1 million kms of

testing in India. Given below is the picture which shows Daimler's

camouflaged trucks (LCVs & HCV) being tested on its new test track.

� Further, the test track would operate as an independent profit

centre, initially for the use of Daimler’s product testing, and later will

be made available even to component vendors and non-core

competitors for testing their products.

BharatBenz

HCV TruckBharatBenz

LCV Trucks

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BharatBenz Product strategy –

Launch to begin in June ’12; to introduce 16 trucks by 2014

LCVs

MCVs

HCVs

BharatBenz product platforms

GVW: 6-16 T

GVW: > 25 T

Localized

Localized

Daimler plans to introduce 16 trucks in India under the ‘BharatBenz’ brand until 2014

� Deliver global technology at Indian price – Tested for reliability

� LCV & MCV range of products based on FUSO Canter platform

� HCV range of products based on Mercedes-Benz Axor platform

� Products to offer lower Total Cost of Ownership to customer in terms of:

� Higher Service Intervals

� High Reliability

� Low turn around time

� Better Fuel Efficiency

� 25T GVW Haulage truck – June 2012

� 49T GVW Tractor-trailer – June 2012

� 12T GVW Haulage truck – June 2012

� 25T GVW Tipper – Sept 2012

� 31T GVW Haulage truck – Sept 2012

� 31T GVW Tipper

� 40T GVW Tractor-trailer – Dec 2012

� 16T GVW Haulage truck

� 16T GVW Tipper

� 11T GVW Truck

� 9T GVW Truck

� 7T GVW Truck

� 6T GVW Truck

Product launch Map

Daimler plans to introduce its

first set of trucks in June ’12.

After which it will launch a

new model / variant every 2-3

months till 2014. It plans to

come out with its HCV range

first followed by the MCV

range and then the LCV range

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BharatBenz’s LCV truck range

– based on the Fuso Canter range

For its LCV range (6T to 7.5T), Daimler has the following options from its Fuso Canter

range of trucks, which it is likely to bring to India under the ‘BharatBenz’ brand

The Canter LCV range

Fuso Canter truck range FE 5 - 109 FE 6 - 109 FG 6 - 109 FE 7 - 136

GVW (kgs) 5500 6500 6000 7500

Engine

Make Mitsubishi Mitsubishi Mitsubishi Mitsubishi

Model 4D34-2AT5 4D34-2AT5 4D34-2AT5 4D34-2AT5

Capacity (cc) 3908 3908 3908 3908

Max. Power 110 HP@2900rpm 110 HP@2900rpm 110 HP@2900rpm 136 HP@2900rpm

Max. Torque 275 Nm@1600rpm 275 Nm@1600rpm 275 Nm@1600rpm 370 Nm@1600rpm

Range 4 x 2 range 4 x 2 range 4 x 4 range 4 x 2 range

Maximum Speed (Km/h) 101 101 89 104

Transmission


Model M025S5 M025S5 M035S5 M035S5

No. of gears 5 speed 5 speed 5 speed 5 speed

Type Synchromesh Synchromesh Synchromesh Synchromesh

Standard tyres

Front 7.00R16 7.00R16 215/75R17.5 215/75R17.5

Rear 7.00R16 7.00R16 215/75R17.5 215/75R17.5

Fuel tank capacity 100 litres 100 litres 100 litres 100 litres

Dimensions

Overall length (mm) 6105 6105 6105

Overall width (mm) 1995 1995 1995

Overall height (mm) 2195 2195 2435

Front overhang (mm) 1145 1145 1130

Rear overhang (mm) 480 1480 1475

Wheelbase (mm) 3350 3350 3460

Turning radius (mm) 6000 6000 6800

Below is the picture of the

camouflaged Fuso Canter LCV

truck being tested on the

Chennai roads

Below are likely specifications of the BharatBenz’s LCV truck

range in India as derived from Mitsubishi Fuso Canter platform

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BharatBenz’s MCV truck range

– based on the Fuso’s MCV platforms

For its MCV range (10T to 16T), Daimler has the following options from its Fuso MCV

range of trucks, which it is likely to bring to India under the ‘BharatBenz’ brand

The Fuso MCV range

Fuso MCV truck range FK 10 - 240 FK 13 - 240 FM 15 - 270 FM 16 - 270

GVW (kgs) 10400 13500 15100 16000

Engine


Model 4M50-T5 4M50-T5 4M50-T5 4M50-T5

Capacity (cc) 4899 4899 4899 4899


Max. Torque 529 Nm@1400rpm 529 Nm@1400rpm 529 Nm@1400rpm 529 Nm@1400rpm

Transmission


Model M060S6-0D M070S6-0D M070S6-0D M070S6-0D



Rear Axle


Model D050H D052H D10H D10H

Ratio 4875 5428 4625 4625

Standard tyres

Front 235 / 75 R17.5 265 / 70 R19.5 11R22.5 11R22.5

Rear 235 / 75 R17.5 265 / 70 R19.5 11R22.5 11R22.5

Fuel tank capacity 200 litres 200 litres 200 litres 300 litres

Dimensions

Overall length (mm) 8710 8710 6690 10305

Overall width (mm) 2170 2260 2470 2470

Overall height (mm) 2470 2535 2690 2680

Front overhang (mm) 1135 1135 1245 1245

Rear overhang (mm) 2300 2300 1700 2915

Wheelbase (mm) 5210 5210 3680 6080

Turning radius (mm) 8300 9100 7100 11100

Below are likely specifications of the BharatBenz’s MCV truck range in

India as derived from Mitsubishi Fuso FK/FM MCV platform

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BharatBenz HCV range

– based on Mercedes-Benz Axor platform

Cab optionsMercedes-Benz AXOR

BharatBenz HCV range 2523 3123 4028 4928

GVW 25 tonnes 31 tonnes 40 tonnes 49 tonnes

EngineMake Mercedes-Benz Mercedes-Benz Mercedes-Benz Mercedes-Benz

Model OM 906 LA OM 906 LA OM 906 LA OM 906 LA

Capacity (cc) 6347 6347 6347 6347

No. of cylinders 6 in-line 6 in-line 6 in-line 6 in-line


Max. Torque 810 Nm@1200-1600rpm 810 Nm@1200-1600rpm 1100 Nm@1200-1600rpm 1100 Nm@1200-1600rpm

Transmission

Make Mercedes-Benz Mercedes-Benz Mercedes-Benz Mercedes-Benz

Model G85-6 G85-6 G131-9 G221-9



Fuel tank capacity (options) 250-400 litres 250-400 litres 250-400 litres 250-400 litres

Suspension Parabolic leaf spring Parabolic leaf spring Parabolic leaf spring Parabolic leaf spring

Wheelbase (mm) 6000 5175 3600 4000

Air-conditioning Optional Optional Optional Optional

Power windows Optional Optional Optional Optional

BharatBenz’s HCV range will be based on the Mercedes-Benz ‘AXOR’ model.

Based on the understanding available from various sources, we have derived the

following specifications of the BharatBenz’s HCV truck range for India:

Daimler plans a

no-frills product

range to conform

with Indian

prices and as

such plans to

keep AC, Power

windows etc as

optional

Below is the picture of the

Mercedes-Benz AXOR 25T

HCV truck being tested on

its Chennai Test track

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Daimler’s engine line up for India – Engine options that are

likely to be used in BharatBenz trucks

Model: OM 906 LA

� In-line 6-cylinder engine with an exhaust-gas

turbocharger and charge air inter-cooling

� Displacement: 6374 cc

� 3-valve technology

� Cooling: water-cooled

� Engine management: Electronic engine management

system integrated in the Telligent drive management

system

� Fuel injection system: Unit-Pump System (UPS)

technology with single plunger fuel-injection pumps and

centrally arranged 8-hole or 6-hole injection nozzles

� Injection pressure: up to 1800 bar (Euro 3)

� Performance data for models xx23 –

� Maximum output: 170 kW (231hp) @ 2300 rpm

� Maximum torque: 810 Nm @ 1200 rpm-1600 rpm

� Performance data for models xx28 –

� Maximum output: 205 kW (279hp) @ 2300 rpm

� Maximum torque: 1100 Nm @ 1200 rpm-1600 rpm

� Euro 3 Emission Level

Engines for HCV range

Model: 4M50-T5

(also has T3 & T4 low HP models)

� Electronically controlled water cooled

EGR system

� Common rail direct injection diesel engine

� 16-valve DOHC intercooler-turbocharged


� Power options:

� 140 HP @ 2600 rpm (T3)

� 160 HP @ 2600 rpm (T4)

� 177 HP @ 2600rpm (T5)

� Torque options:

� 412 Nm @ 1400 rpm (T3)

� 470 Nm @ 1400 rpm (T4)

� 529 Nm@1400rpm (T5)

� Max. speed: 101 kmph

Engines for MCV range

Model: 4D34-2AT5

� Turbocharged with

intercooler

� 4-stroke, water-cooled,

� Direct injection diesel

engine


� 110 HP@2900rpm

� 275 Nm@1600rpm

� Max. speed: 101 kmph

For LCV range

Daimler is likely to have the following range of engines for its BharatBenz trucks in India:

� 110HP and 170HP engines for LCV and MCV trucks

� 230HP and 280HP engines for the HCV range

While Daimler will manufacture its HCV

engines in-house, unconfirmed sources

mention that it is likely to have a

contract manufacturing deal for its LCV

and MCV engines with Argentum

Motors (led by Mr. BVR Subbu)

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BharatBenz’s Gearbox options (for HCV range)

– plans to bring in 6 speed and 9 speed gearbox range

G131 – 9 (Ratios)

• 1st gear = 9,478

• 2nd gear = 6,635

• 3rd gear = 4,821

• 4th gear = 3,667

• 5th gear = 2,585

• 6th gear = 1,810

• 7th gear = 1,315

• 8th gear = 1,00

• Crawler gear = 14,573

• Reverse gear = 13,862

Weight (not including oil):

approx. 210 kg

G221 – 9 (Ratios)

• 1st gear = 10,187

• 2nd gear = 7,156

• 3rd gear = 5,129

• 4th gear = 3,833

• 5th gear = 2,657

• 6th gear = 1,867

• 7th gear = 1,338

• 8th gear = 1,00

• Crawler gear = 16,15


Weight (not including oil):

approx. 290 kg

Models: G131-9 & G221-9

The gearbox G221-9 / G 131-

9 is a direct-drive gearbox with

8 synchromesh forward gears,

one constant-mesh crawler

gear and one reverse gear. It

consists of a 4-speed basic

gearbox with a pneumatic

rear-mounted unit (range). It is

shifted hydro-pneumatically.

9 Speed gearbox range

G85 – 6 (Ratios)

• 1st gear = 6,70

• 2nd gear = 3,81

• 3rd gear = 2,29

• 4th gear = 1,48

• 5th gear = 1,00

• 6th gear = 0,73


Model: G85 –6

The G 85-6 gearbox is an all-

synchromesh gearbox with 6

forward gears and one

reverse gear. It features a

hydraulic gearshift.

6 Speed gearbox range

Daimler plans to bring in its 6 speed and

9 speed gearboxes for its BharatBenz

HCV range. Following are the gearboxes

which it presently uses in its Mercedes

Axor range and are likely to be the

Indian options as well…

Following

are the

options

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Pricing Strategy – Global trucks at local prices…

� Higher localization (85%) from the beginning – at local prices

� Local manufacturing of engines – contract & in-house

� In-house manufacturing of frames, axles, sheet metal parts etc.

� Local procurement of most of the components – with a large vendor base (~50%) located within a

50 km distance of the mother plant in Chennai.

� Will also act a shield against currency fluctuations

� Huge tax benefits – Full-fledged manufacturing in India helps in reducing taxes

� 110% customs duty for imported FBU

� 60% customs duty for imports of SKD kits

� 12% excise tax for locally manufactured trucks (including engines and other aggregates)

� No-frill / Stripped down versions of their existing models – Mercedes-Benz Axor and Fuso Canter

products. Basically, Daimler would provide a no-frill products without features such as AC, power

windows etc.

� Additional revenue stream – test track as a ‘Profit Centre’, i.e. it will lend out the test track to others

even to its component vendors and non-core competitors which will help in augmenting its revenues,

although it may not be a major revenue earner

How they are able to make it cheaper? – Global products and local prices!

Daimler plans to price its ‘BharatBenz’ trucks just about 5-10% expensive than the existing truck models in the

market of that of Tata and Ashok Leyland. Some of the pointers to this aggressive pricing strategy could be:

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FIBRESResearch

Network Planning Strategy – Accelerated network ramp up

planned covering 73 locations of the industry by 2014…

7

63

73

0

10

20

30

40

50

60

70

80

June '12 July '12 to June '13 June '14

Critical period of

network ramp up

during which DICV

plans to launch

most of its models

Distribution network ramp-up plans

(no. of locations)

BharatBenz is in discussion with 200 dealer groups who have expressed interest till date.

However, the company plans to have about 70 dealerships which it feels can cover the entire

Indian market. – says Mr. Marc Llistosela, managing director and CEO of DICV…

Phase wise ramp up plans…

• Network planning based on point of sales and service requirements of customers

– Network approach worked out towards early dealer viability and a promise of

high growth

• Facilitate world class dealership build up with larger areas of operations

• Will involve project monitoring tools – since delays cause the highest cost

• Future proof dealerships with:

� Having Lean Infrastructure with built in expansion scopes

� Generating Long Term Association with clear 2nd generation visibility

Salient features of Daimler’s Network planning strategy

� Phase 1 – By June ’12, 7 locations will be covered

� Phase 2 – Between July ’12 to June ’13, 63

locations will be covered (DICV: 34 and MMC: 29)

� Phase 3 – By June ’14, 73 locations would be

covered

Above these, it will have Regional Offices in major

metros and Area Sales Offices in 10 prominent cities

Dealerships have been granted

in Western and Southern India.

For Central India, they have

started allotting dealerships now.

As far as North is concerned,

some reports say that Daimler has

appointed Mr. BVR Subbu as its

distributor in the Delhi NCR region

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FIBRESResearch

After sales model

– Focus on life-cycle approach towards customers…

Daimler plans to have service outlets spread over 95 locations

and covering 90% of the total market, right at the time of launch

On site service

Daimler’s After Sales Service Model

Insurance Highway Assist

Long term ServiceAgreements

� Participation in overall lifecycle of product

� Solutions beyond product to enhance peace of mind

� Onsite service solutions – lessons from mining industry

� Empowered front end staff:

� Mechanic access to documentation

� Leverage technology – Manuals / Training / Integrated operations

Salient

featur

es

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FIBRESResearch

Daimler Financial Services India Private Ltd.

� Officially launched as a Non-Banking Finance Company (NBFC) in July 2011 – captive finance

company as a 100% subsidiary of Daimler Financial Services AG

� Headquartered in Chennai and operating under the brand ‘Mercedes-Benz Financial’ for cars

and ‘BharatBenz Financial’ for trucks

� Initial investment of US$ 50 million (~ Rs.250 cr.)

� Objective – to offer financing, leasing and insurance products to dealers and customers of

Mercedes-Benz cars (with immediate effect) and for BharatBenz Trucks (from 2012 onwards)

� Hopes to break-even in 4-5 years and aims to reach a loan book of US$ 500 million

(~Rs.2,500 cr.) in India by 2016

� Despite the likelihood of truck financing volumes being higher than car loans, the two

businesses will comprise equal halves of Daimler Financial’s India portfolio in the coming years

� Human Capital – Led by Mr. Siddhartha Nair, MD, the team consists of about 50 experienced

industry professionals and more to join soon

Quick Quick Quick Quick

factsfactsfactsfacts

� Daimler Financial Services operates in 40 countries worldwide.

� With contract volume of Euro 64 billion for 2.5 million vehicles at the end of 2010, it is one of the world's

largest automotive financial services providers for passenger cars and the world's largest provider of

financing for trucks, buses and vans.

� Also provides automotive insurance solutions with a contract portfolio of more than 1.8 mn contracts.

� About 40% of Mercedes-Benz cars and about 25% of CVs of the Daimler Group is financed or leased by

Daimler Financial Services AG – The Indian unit intends to replicate this performance in India

Global Track Record

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FIBRESResearch

Planned business model of Daimler’s Financial Services

business in India

� Dealership based model – Has put in place an electronic point-of-sales system to

deliver speedy loan approval decisions and contract processing across all Mercedes-

Benz dealerships.

� Finance contract sold under the product name ‘STAR Finance’ and has various

structural options like Step-up finance, Step-down finance and Bullet finance

� STAR Finance is also offered with a ‘Balloon’ option – where EMIs are lower with a large

final payment that transfers ownership of the vehicle to the customer

� Margins – Hopes to maintain a net interest margin (NIM) of 3%

� Dealership based model – Has put in place an electronic point-of-sales system to

deliver speedy loan approval decisions and contract processing across all Mercedes-

Benz dealerships.

� Finance contract sold under the product name ‘STAR Finance’ and has various

structural options like Step-up finance, Step-down finance and Bullet finance

� STAR Finance is also offered with a ‘Balloon’ option – where EMIs are lower with a large

final payment that transfers ownership of the vehicle to the customer

� Margins – Hopes to maintain a net interest margin (NIM) of 3%

Financing

Business

� Globally it offers fleet management services – but sources say that is unlikely to launch

the same in India in near future. However, this remains an option in future

� Globally it offers fleet management services – but sources say that is unlikely to launch

the same in India in near future. However, this remains an option in future

Fleet Mgmt

Business

� Got approval in July 2011 from the Insurance Regulatory and Development Authority of

India (IRDA) to offer insurance

� The company will be a corporate agent for Pune-based Bajaj Allianz with which it has

an exclusive tie up for insurance products

� Will be sold under the name of ’Mercedes Benz insurance’

� Got approval in July 2011 from the Insurance Regulatory and Development Authority of

India (IRDA) to offer insurance

� The company will be a corporate agent for Pune-based Bajaj Allianz with which it has

an exclusive tie up for insurance products

� Will be sold under the name of ’Mercedes Benz insurance’

Insurance

Business

� Leasing contract sold under the product name ‘STAR Lease’

� Leasing available based on choice of the vehicle, repayment period and anticipated

contract kilometer limit

� Helps the customer in knowing the vehicle’s future value upfront

� Lease product is bundled with insurance

� Leasing contract sold under the product name ‘STAR Lease’

� Leasing available based on choice of the vehicle, repayment period and anticipated

contract kilometer limit

� Helps the customer in knowing the vehicle’s future value upfront

� Lease product is bundled with insurance

Leasing

Business

� As per some reports, Daimler is likely to enter the

branded credit cards business in 2013

� As per some reports, Daimler is likely to enter the

branded credit cards business in 2013

Credit Card

Business

Daimler

Financial

Services

India

Private

Ltd.

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FIBRESResearch

TruckStore – Daimler’s brand for its Used Trucks business is

being planned to be introduced in India soon…

TruckStore was one of the first used truck dealers to introduce a clearly defined 3-

level-categorisation of vehicles. According to international standards, the trucks

are categorized into Gold, Silver and Bronze as follows:

� ‘TruckStore’ – is a brand part of the Daimler Trucks division which began its operations in 2001

� Europe’s largest dealer for Used Commercial Vehicles with 31 centers in 15 European countries

� Trades in Used Trucks, Used Vans, Used Tractor units, Trailers, Semitrailers etc. of all types, with all bodies, of any age and of all

brands like – Volvo, Scania, Iveco, MAN, Renault, Mercedes-Benz, Mitsubishi etc.

� Consists of about 4,000 vehicles in stock on an average all over Europe. All the vehicles are classified as Gold, Silver and Bronze

– based on age, condition, mileage and service component of the vehicle (refer boxes below for more details)

� Comes with range of services like financing, leasing, rental, service contracts, buy-back and the TruckStore warranty

� Warranty – It covers trucks of all brands and models of the categories Gold and Silver up to an age of 6 years. With duration of

12 months, the warranty covers the entire powertrain with respect to workshop costs in case of damage – without any excess

payable for the customers. Irrespective of the location of the customer, the warranty applies EU-wide without mileage limit.

� Virtual market – The used CVs are also available on the online network of TruckStore where user-friendly menu navigation and an

intelligent search function helps the customer to retrieve current vehicle photos, prices and detailed descriptions for used trucks in

15 languages

Daimler is planning to introduce its ‘Truckstore’ brand of Used Trucks business as part of

its India strategy. While it may be too early to launch such an operation, the TruckStore

business model caters to all brands of trucks – which suggests that it can be used to

exchange existing truck brands for BharatBenz trucks in the Indian CV market

� Vehicle maximum 4 years old

� TruckStore Warranty / Manufacturer warranty

� Technical inspection in line with TruckStore standards

� All necessary repairs and services carried out

� Legally prescribed main inspection new

� Fully refurbished

� Tyre tread at least 6mm

Gold� Vehicle maximum 6 years old

� TruckStore Warranty optionally

� Technical inspection in line with

TruckStore standards

� Roadworthy

� Refurbished

� Tyre tread at least 3mm

Silver� Technical inspection

� Roadworthy

� Basic cleaning

Bronze

Quick Facts of Daimler’s Used Truck business which is now a Europe-wide operation

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FIBRESResearch

Other services…

Daimler has been offering some of the services for its Mercedes-Benz cars in

India. Some of these are likely to be adopted for its BharatBenz trucks from

2012 onwards…

� An extended warranty program beyond the standard warranty (2 years for its cars) on a

vehicle without any extra cost or mileage limitation

� An extended warranty program beyond the standard warranty (2 years for its cars) on a

vehicle without any extra cost or mileage limitation

Star Care

Program

� Similar to AMC contracts

� Offered by the authorized dealerships using the company’s genuine parts

� Covers all the vehicle’s basic service requirements as prescribed by the company

� Can be availed by paying a defined amount according to the vehicle model, contract

period and vehicle mileage

� The service package is transferable from one customer to another during the contracted

period

� The benefits can be availed at any of the company’s workshop across India

� Helps in improving the retention value of the vehicle

� Similar to AMC contracts

� Offered by the authorized dealerships using the company’s genuine parts

� Covers all the vehicle’s basic service requirements as prescribed by the company

� Can be availed by paying a defined amount according to the vehicle model, contract

period and vehicle mileage

� The service package is transferable from one customer to another during the contracted

period

� The benefits can be availed at any of the company’s workshop across India

� Helps in improving the retention value of the vehicle

Star Ease

Service

Package

� Has been bundled with any new Mercedes-Benz car purchase since 2010

� Covered for a 3 year period, for a 24x7 assistance

� Can be used in the times of breakdown or accidents

� Services available like vehicle towing, replacement vehicle, medical coordination, taxi

service, mobility benefit like air travel and hotel accommodation etc.

� Has been bundled with any new Mercedes-Benz car purchase since 2010

� Covered for a 3 year period, for a 24x7 assistance

� Can be used in the times of breakdown or accidents

� Services available like vehicle towing, replacement vehicle, medical coordination, taxi

service, mobility benefit like air travel and hotel accommodation etc.

Mercedes-

Benz

Roadside

Assistance

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FIBRESResearch

� More business control to dealerships

� Visibility of stocks and lead times

� Single window interface encompassing modules of DMS,

CRM & Workshop Information systems, Ordering etc.

� Focus on floor skill enhancement

� Mechanic Training & Empowerment

� Sales Man Empowerment

� Facilitative margin and incentives systems

Further, Daimler plans to leverage Indian IT edge to deliver

user friendly front-end for dealership systems & processes…

BharatBenz plans to

install some of the IT

processes for easy

workflow and with an

aim to have zero

defect operations…

Integrated web

application1Touch screen

enabled2Animated Training

Module3Multilingual Voice

Over4

Multilingual Service

Manuals53D Optimized Parts

Catalogues6

Accident Repair

Search Module7

DMS Integrated

Damage Code8

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FIBRESResearch

Implications – emergence of a ‘new middle market’ where

BharatBenz plans to create its place…

3 key strategies of BharatBenz to establish itself in the Indian CV space:

� Aggressive target pricing so as to compete effectively with entrenched competitors like Tata Motors

and Ashok Leyland

� Focus on Customer Service from the beginning to differentiate with the existing CV majors and

establish its brand

� Placing products in the ‘new middle market’ which are just about 5-10% costlier but with high-end

features and higher HP engines (for faster turnaround time) – unlike Tata Prima, Volvo FH etc. which

comes in at a very high premium pricing (almost 2-3 times of the basic / conventional CV range)

Basic CV market

New Middle market

Premium CV market

Current Tata & AL models

BharatBenz models planned

Tata Prima, Volvo FH, MAN

Emergence of a ‘new middle market’ – where BharatBenz plans to establish itself

Source: FIBRES Research

Rs.15-18 lakhs

Rs.18-22 lakhs

Rs.30-45 lakhs

New Middle market:5-10% premium pricing over the existing basic models

M&HCV price range

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FIBRESResearch

Why BharatBenz is a threat?

But what is critical for Daimler is the right execution of this strategy!!

Strong recall of the ‘Benz’ brand name in the minds of the customers – especially in the

South since Tata trucks previously were called as ‘Benz’ trucks

Competitive pricing strategy aided by high localization etc.

Reach-out Marketing strategy – Also, we understand that they have been pitching to the

freight operators that though BharatBenz trucks will be 10% more expensive than

competition, running costs over a 5 year period will be 20% lower. Further, we learn that

they have even met the top 100 operators and understood their requirements.

Advantage of the global trucking experience backed by global technology

Additionally, Daimler has gained experience of the Indian psyche through their Mercedes-

Benz car business for the last 15+ years

Changing paradigm – Last but not the least, changing 2nd generation Indian mindset with

more importance towards after-sales service than just the product brand can erode Tata’s

‘brand’ competitive advantage and make it vulnerable to the emerging global competitors

Some of the key reasons are…

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FIBRESResearch

So what does the SWOT of BharatBenz tell us?

THREATS

� Investment risk – as it has taken a leap of faith in a

duopolistic Indian CV market where no global

player is able to establish itself as yet

� Execution risk – Daimler must ensure that all the

elements of its strategy must get well executed.

Else, its bold attempt can prove to be a big setback

which may floor Daimler for a long period of time

� Timely aggression from the Indian CV players

OPPORTUNITIES

� Upgrading the Indian CV operators by creating the

new-middle market through provision of global

technology at a marginally premium priced products

� Participation in one of the world’s largest CV market

� If successful, Daimler can get a strong foothold in the

rapidly growing Indian CV market

WEAKNESSES

� Lack of Indian market experience and knowledge

� Unproven products given that they are tweaked for

the Indian market

� Lack of strong and established sales and service

network

� India operations have been built from scratch, with

no readily available global blueprint for help

STRENGTHS

� ‘Benz’ brand recall among many sections of the Indian

market – should make BharatBenz easy to establish

itself

� Aggressive pricing may allow it to compete

meaningfully with entrenched players

� Backed by global technology

� Changing paradigm – with customers willing to

experiment may support its entry in the Indian market

Source: FIBRES Research

SWOT Analysis of BharatBenz

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FIBRESResearch

Conclusion – What Tata Motors should do??

� Lead in creation of the ‘new-middle’ market by launching new products in that segment well ahead of

its competitors – thereby bridging the gap in the product portfolio on time. One way of doing this would

be to consider the stripped-down version of the Tata Prima range of premium trucks by making many of

its key features as optional than a standard fitment. Another benefit of doing this will help the company

to upgrade the customers step by step from the ‘Basic CV’ products to the ‘New-Middle’ products and

then further to ‘Premium CV’ products – will eventually help in retaining customers for a longer term.

� Focus on ‘Services’ to sustain brand advantage. As the paradigm changes, the modern customer

has started looking beyond just the product brand and into the consumer experience brand. This is

visible in the second generation of customers who have shown their willingness to experiment with a

new brand while making ‘Services’ as one of its key consideration of his brand purchase decision. With

the new entrants in the CV market plan to focus and market their services along with their products, it is

imperative for Tata Motors to focus on its ‘Services’ not only as a revenue earner but more importantly to

sustain its brand advantage which it has built around the product till now.

� Continue to build and maintain a strong relationship with the channel partners – lest they may

jump over the ship and move towards new entrants like BharatBenz etc.

We leave you with just 3 thoughts to ponder over…

~~~***~~~

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FIBRESResearch

THANK YOU!!THANK YOU!!THANK YOU!!THANK YOU!!

bharatbenz final

Documents

net interest margin

sheet metal parts

hero group withdrew

based bajaj allianz

member advisory council

dealership based model

south east asia

fuso mcv range