The big news this week is that Wolfgang Bernhard, the man who launched the famed Dodge Tomahawk concept motorcycle while COO at Chrysler, is taking over the reins of the global truck & bus unit for Daimler Benz AG in April.
The Tomahawk made Bernhard a household name in the U.S., but he was already well known in the automotive industry, having served as CEO for the renowned AMG high performance division at Mercedes. (Think S Class sedans on PEDs!) After the Daimler-Chrysler divorce, Bernhard held a number of different positions, but the last three years have been spent overseeing production at Mercedes Benz.
“There’s an unwritten law at Daimler that the CEO has to prove himself within the truck division,” according to Roman Mathyssek an analyst at IHS Global Insight. It’s a notoriously tough market, anywhere in the world.
“The chances that Bernhard will succeed (Dieter) Zetsche as CEO in 3 years when his contract expires have further increased with this announcement.” (Zetsche himself served as CEO of Freightliner earlier in his career).
In April there will be a very aggressive young gun taking over Daimler’s global truck division.
More importantly, what was lost in the noise of this announcement was that between 2004 and 2012, Class 8 sales of Daimler Trucks North America’s Freightliner brand have risen 7.3% at a time when sales of its competitors have dropped 9%. DTNA led the market last year gaining 2.6 percentage points in market share to 34.2% and raising U.S. sales by 23%. This is nearly double the market share of any other single nameplate on the street. And as if that weren’t enough, Freightliner came out swinging for the fences in January. Freightliner is now the dominant player in Class 6 & 7 sales as well. This is pretty amazing considering they didn’t even have a medium duty truck twenty years ago.
The single most important factor driving truck purchasing decisions and the reason for why Freightliner has gained such dominance in the truck market is a formula called TCO (Total Cost of Ownership). A truck is a tool, a costly capital asset that must yield financial returns when used. TCO calculates acquisition costs, fuel mileage, warranty, downtime, resale value, etc. (with some slight variations). Hands down, Freightliner is the winner in this category and it is reflected in the sales to large fleets who often calculate their costs to “1/100th” per mile. They have designed a host of products and services to deliver the lowest TCO. In this particular market, Freightliner’s market share numbers have gone off the charts.
Since 2004, DTNA has retooled their strategy, products and support network and this is the real reason the share numbers are rising. No longer satisfied to be the industry leader in just the major fleets, they have devised a strategy to go after every segment no matter what size
or application. They have unleashed a slew of new products. The breadth of choices is staggering and the quality is world class. The Detroit Diesel engine is the industry leader in fuel mileage and now Daimler is about to introduce their own transmission designed to improve fuel efficiency even more. (Daimler also owns Detroit Diesel Corporation) Tools such as “Express Assessment”, “Virtual Technician”, “Elite Support”, “Alliance Parts” and many other programs make it easier and less expensive to keep these products operating at optimum capability for the end user.
Finally, there is an intense downward pressure on the dealer body to embrace and immediately resolve customer problems. Dealers make enormous investments in personnel, buildings and tools, all for the sake of keeping their customer up and running and their costs down. It’s an arms race that’s going to take a lot of money to participate in. Bernhard likes going fast. We’re about to see if the rest of the truck manufacturing can keep pace with him.