Growth in the bus industry kept pace with global economic recovery last year, as the increase in worldwide bus sales exceeded expectations. The bus market grew by 17 percent last year compared to 2009. This resulted in a total volume of approximately 305,000 units. The growth forecast issued last year for 2010 was around four percent. Daimler Buses was able to more than profit from this development, as its growth significantly outpaced that of the market as a whole last year.
Daimler Buses sold 39,118 chassis and complete buses in 2010. This figure corresponds to a 20-percent increase from the 32,482 units sold in 2009, and is also nearly as high as the record figure posted in 2008.
These sales generated revenues of €4.6 billion for the unit in 2010 (+8 percent). EBIT last year rose 17 percent to €215 million (2009: €183 million).
Speaking in Stuttgart today, Hartmut Schick, Head of Daimler Buses, had the following to say about business development in 2010: “Daimler Buses was once again the top performer in the global bus business. We were able to grow more rapidly than the market as a whole and this growth exceeded our own forecasts.”
Five strategic approaches for sustained success
“Daimler Buses is already the world’s most profitable bus manufacturer,” said Schick. “Our goal now is to achieve a return on sales of six percent on average across the entire business cycle, and thus consolidate our benchmark position. We will do this by fully exploiting existing growth potential in our traditional markets and by further expanding business in new ones. We will also extend our technological leadership. At the same time, we are continually working together with our approximately 17,000 employees to further improve our efficiency. As an attractive employer, we can rely on a highly qualified and effective team that will makes us more able than other companies to overcome future challenges.”
Daimler Buses will introduce two important new products in Europe this year: the new generation of the Mercedes-Benz Citaro urban bus and the small Mercedes-Benz Sprinter 77 city bus. The two models will make a major contribution to expanding the unit’s leading position even further. In the U.S. last year, Daimler Buses presented the new Setra TopClass S 417 and the Orion VII transit bus with EPA10 exhaust-gas treatment technology.
The Competence Center for Mercedes-Benz bus chassis in Brazil puts the unit in an outstanding position to participate in the dynamic market growth expected there. Moreover, the World Cup soccer championship in 2014 and the Olympic Games in 2016 will provide additional sales momentum.
In 2020, one out of every five buses with a GVW of over eight tons will be sold in India (currently the world’s second-largest bus market after China). Daimler Buses therefore plans to exploit all possible sales and service network synergies with Daimler Trucks in order to benefit from this growth as well. Besides the travel coaches it has already introduced to the Indian market, Daimler Buses is developing additional customized products for India.
Schick pointed out that markets like Indonesia also offer potential for profitable growth. “Strong growth was recorded in Indonesia over the last few years through the modernization of city bus fleets and infrastructure,” he said. “In fact, market volume in that country will nearly double over the next eight years. Sales growth of 73 percent in 2010 now gives us a market share of 40 percent in the country, and we’re very confident that we’ll be able to highly benefit from growth in Indonesia in the coming years as well.”
Growth through new products
Expansion of business in new markets offers growth opportunities that can be exploited with the help of new business models. Traffic volumes in large cities will continue to rise significantly — and this will also lead to an increase in demand for viable public transportation systems. A promising growth sector here is Bus Rapid Transit (BRT), a system in which buses run in extremely short intervals in separate traffic lanes. Daimler Buses is already active in this area in cities like Nantes, Istanbul, Bogota, and Johannesburg.
“Over the next few years, the potential for BRT systems is particularly high in Brazil,” Schick said. “We believe the World Cup and the Olympics will generate bus sales potential of 5,000 units.”
Daimler Buses is pursuing its vision of sustainable mobility with innovative products such as hybrid and fuel cell buses. Daimler Buses in North America has supplied the world’s biggest fleet of hybrid buses (more than 3,200), for instance. In Europe, Mercedes-Benz Citaro BlueTec Hybrid urban buses are already in operation in Stuttgart, Hamburg, Krefeld, Mühlheim, Rotterdam, and Milan. As part of the EU’s CHIC (Clean Hydrogen in European Cities) project, 26 Mercedes-Benz fuel cell-hybrid buses will begin to operate in five cities this year in order to demonstrate the suitability of fuel cell technology for everyday use.
Operational Excellence — the fourth pillar of Daimler Buses’ business strategy — focuses on consistent and continual efficiency enhancement. It’s therefore only logical that the unit is investing in its production locations. The body-in-white manufacturing facility in Mannheim was expanded, for example, as was the paint shop in Neu-Ulm. In 2010, Bus production capacity in Turkey was increased to 4,000 units per year in order to be able to respond more effectively to market demands. The division will also invest in the expansion of its production capacities in Latin America this year.
Daimler Buses’ production network ensures cost efficiency and flexibility. The division’s four European facilities form a flexible production network, thereby guaranteeing optimal capacity utilization and the ability to react effectively in the normally weak months at the beginning of the year and the more active ones in the second half.
With its innovative, high-quality new products, Daimler Buses expects to remain ahead of its competitors as the world’s leading supplier of buses over 8 tons GVW. The division also expects to build on last year’s high sales figures in 2011 and 2012. However, the room for growth is rather limited due to the anticipated development of the core markets in Western Europe and Latin America.
Schick summarized the expectations for 2011 as follows: “We expect global bus market volume to total approximately 310,000 units this year. As a result, we have set ourselves the firm goal of surpassing the important 40,000 unit sales mark for Daimler Buses in 2011.”
Source: Daimler AG