Cyclicality of the CV Business

Question 1

Four steps to overcome threats of a cyclic truck industry

Answer 1

1. Global presence (to compensate for regional trends)
2. Diversified product (to reduce segment dependency)
3. Focus on services (for steady and long-term revenues)
4. Flexibility (to help reduce internal vulnerability)

Question 2

Example of when a global presence compensated for a local trend

Answer 2

China compsensated for the decline of NAFTA & Europe in 2009

Question 3

How high can the yoy change be in a regional market?

Answer 3

up to 50%

Question 4

What does a diversification of product offering allow?

Answer 4

To shift volumes within regions.

Question 5

Which market segment is currently size-wise most promising?

Answer 5

The mid-market.

Question 6

What reduces the dependency on the cyclical new-build business?

Answer 6

Offering comprehensive solutions.

Question 7

3 Levels of customer solutions

Answer 7

• starting point = optimal vehicles for customer needs
• standard business = financing (loans, leasing) and insurance
• additional business opportunities

Question 8

Customer solutions:

What are additional business opportunities?

Answer 8

• driver services
• vehicle services
• transport efficiency
• mobility
• innovation

Question 9

Are additional business opportunities correlated to new-built sales?

Answer 9

No

Question 10

What are driver services?

Answer 10

driver training, infotainment, safety

Question 11

What are vehicle services?

Answer 11

uptime management, TCO management, truck & trailer servicing

Question 12

What are transport efficiency services?

Answer 12

• logistics management, goods management, environmental management

Question 13

What are mobility services?

Answer 13

Truck rental, driver service, fleet pool

Question 14

Key innovation business opportunities

Answer 14

Autonomous driving, connected trucks, hub concepts

Question 15

Flexible products and production:

What can reduce costs during the next downturn?

Answer 15

Optimized cost base and high flexibility.

Question 16

What can be done in terms of flexible products & production?

Answer 16

Modularization of products to minimize complexity and overhead.
Use of supplier cosortia (companies together) for more flexibility in production.

Question 17

What can be done in terms of modularization of products to minimize complexity and overhead.

Answer 17

The vision is to have shared blocks. So you want to increase the amount of shared components across products and brands.

• Decrease parts and overall complexity
• Reduce fixed costs e.g. for R&D

Question 18

What does supplier consortia for more flexible production deliver?

Answer 18

• reduce the degree of vertical integration makes production swings more manageable.

–> A consortium in this context is two or more suppliers coming together to bid during a procurement.

Question 19

How can we diversify the portfolio even more?

Answer 19

Diversify through new business beyond trucks. e.g. use of CV engines in marine & power and agriculture.