PUERTO VALLARTA, MX – In a year when dealers in Canada and the U.S. face a dramatic downturn in truck sales, Mexico is a world apart. As of November the market for Class 4-8 vehicles was up 18.5%, and Daimler Trucks North America accounted for 36% of it — up 7.8% over last year.
But Stefan Kurschner, president and Chief Executive Officer of Daimler Vehiculos Comerciales Mexico, says there’s room for more.
“It’s a country which has its problems, but it is a land of opportunity as well,” he said today in a briefing to media from across North America.
The year-to-date sales of 30,190 Class 4-8 trucks – 26,890 of which were Class 8 models – is still a fraction of what the country should require, he said, suggesting the market could handle double those volumes. The average age for a truck in Mexico is also 17.8 years; more than 150,000 vehicles on the road today are still over 20 years old.
There are undeniable economic challenges, though. The Gross Domestic Product will grow by just over 2% this year. And the peso continues to struggle in the face of low oil prices. The national currency is worth about 6.5 cents against its Canadian counterpart, and has fluctuated wildly.
Daimler is offsetting the currency challenge by setting prices in pesos, unlike other manufacturers in the market, and guaranteeing the prices for six months at a time. Prices had been set in U.S. dollars until as recently as 2015, leaving dealers to account for shifting exchange rates in quotes and when filing taxes. “It was very, very complicated,” said Fernando Zapata of Zapata Camiones, a dealership group with 558 employees. But the peso pricing has simplified the issue, and is playing a role in Daimler’s growing market share, he added.
Many customers collect their revenue in pesos, Kurschner says. “If they earn pesos, they want to pay in pesos.” Daimler, meanwhile, has access to financial instruments that can help to hedge against currency shifts.
But there are other challenges ahead.
Mexico is also preparing to move from EPA 04 emissions standards to EPA 13 technology. The draft rules were unveiled only weeks ago, but could take hold as early as 2018. And there is still work to do before that happens. Ultra Low Sulfur Diesel, widely available in Canada and the U.S., is not available everywhere in Mexico. Local governments also set up their own emission-related rules, Kurschner said. Some larger cities have restricted truck access in a bid to tackle pollution.
Drivers and mechanics alike will need to be educated about the new standards, Kurschner said. The change could also lead to a “pre-buy” if fleets rush to buy EPA 04 equipment to delay the higher costs associated with the newer generation of equipment.
“That’s obvious with every emission change,” he said.
Mexico does have an incentive program for those who want to scrap old trucks, but it is very bureaucratic, Kurschner added, noting how Daimler has applied it to about 1,000 vehicles.
The country’s dealers are clearly taking steps to eliminate red tape on their own, adopting programs that streamline processes and establish best practices.
The recently adopted Promesa Mutua – essentially a customer bill of rights – commits to optimizing operations, simplifying processes, effectively communicating, and establishing the same level of service from one dealer to the next.
A new Dealer Management System more seamlessly shares data between dealers and the Original Equipment Manufacturer, said dealer council president Alejandro Rivera, offering the example of one change that has emerged. His own dealership, Camiones Rivera, was also one of the first to be certified through the Evolucion Elite program, which commits to measures such as better service times. “We are measuring the time the customer spends in the workshops, trying to make it shorter every day,” he said.
And gains are being realized. The country’s 56 Freightliner shops completed about 65,000 service orders last year, but saw 110,000 of them in 2016. Where service and repairs took an average of 9.8 days in 2013, they now average 2.7 days. Spare parts, which were delivered just once a week in 2014, now arrive every single day.
Jose Luis Gonzales of Euro Centro Camionero refers to a Joint Action Development Group that has helped reduce warranty-related paperwork by about 70%.
“Everyone in the headquarters gets the chance to work a couple of days with the dealer,” Kurschner said. It’s where finance teams have the chance to see issues like invoice-related challenges first hand. “Turning a table has created a much easier conversation with the dealer network … Everybody sells in our company.”
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