In an interview with Autocar Professional, Karl Deppen – head of Daimler Truck Asia – explains how two factors have shaped the company’s new strategy in India.
08 Oct 2024 | 503 Views | By Kiran Murali & Ketan Thakkar
Karl Deppen, head of Daimler Truck Asia, begins with a key observation as he launches into the German truck maker's new strategy for India: This is a market unlike anywhere else in the world. Therefore, he points out, the company’s strategy has been built around two key inputs – the ...
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Karl Deppen, head of Daimler Truck Asia, begins with a key observation as he launches into the German truck maker's new strategy for India: This is a market unlike anywhere else in the world. Therefore, he points out, the company’s strategy has been built around two key inputs – the unique conditions existing in India and the company's own commitment to sustainable growth.
Central to the new strategy is the importance of collaboration and an emphasis on flexibility in terms of fuel choices. Deppen points out that due to the extreme diversity in the market, it is not possible for a single company to come up with all the solutions, Deppen explains in an interaction with Autocar Professional.
"India's energy landscape differs significantly from other markets. Its extensive geography and varied operating conditions necessitate multiple solutions to reduce emissions in the transport sector. The investments required for future innovations are substantial," he points out.
This perspective informs Daimler's openness to partnerships, including for its BharatBenz brand in India, and sets the stage for the company's collaborative efforts.
"Utilising partners' expertise where appropriate – whether in propulsion technology or other areas – is a practical consideration…Our industry has a history of successful partnerships, and we intend to continue this approach."
This commitment to collaboration is already bearing fruit in tangible ways. A prime example of this strategy in action is Daimler Truck's recent partnership with Cummins Inc. for cleaner diesel engines in India.
This collaboration extends beyond the Indian market, with Cummins investing in Daimler's medium-duty engine platform and its production for Daimler Trucks & Buses globally. Such partnerships demonstrate the company's ability to leverage global relationships for local benefit.
Similarly, the company's Mitsubishi Fuso division and Toyota's Hino are considering a potential merger to address industry changes. Although temporarily delayed due to Hino's emission compliance issues, Deppen sees this as an opportunity to create value for both companies and the industry as a whole.
To provide context for these strategic moves, Deppen identifies three major industry shifts driving these collaborations: the move towards zero-emission transportation, the development of advanced digital technologies, and increased competition from new market entrants. These factors, he argues, necessitate a collaborative approach to innovation and market development.
"The necessary investments require significant scale to be feasible," Deppen notes, tying this back to the partnership strategy. "For Fuso and Hino, both at early stages of this investment cycle, combining strengths and resources is a logical step." This rationale underpins Daimler's broader approach to partnerships, both in India and globally.
Fuel Flexibility
The emphasis on collaboration in the new strategy goes hand in hand with an openness towards various technologies.
"We assess which technologies best meet our customers' needs before identifying the most suitable partners to improve development and quality," he explains. This flexible approach allows the company to adapt to changing market conditions and technological advancements.
This is exemplified by the company's plans to introduce its first battery-electric light-duty truck, the eCanter, in India by 2025. This launch will not only contribute to Daimler's sustainability goals but also expand BharatBenz's presence into the 3.5 to 7.5-tonne segment, broadening its market reach.
The eCanter's introduction builds on its global success. Based on the Mitsubishi Fuso platform, the model has proven effective worldwide, with over 2,500 units in operation and more than 8 million kilometers traveled. India is set to become the third major market for local assembly of this model, underscoring the country's importance in Daimler's global strategy.
While the eCanter represents Daimler's initial step towards decarbonisation in India, the company maintains a pragmatic outlook. It recognises that a combination of diesel and CO2-neutral propulsion technologies will coexist in the market for some time, reflecting the gradual nature of the transition to new energy sources.
Expanding on this realistic view of India's energy future, Deppen notes, "The ongoing infrastructure development benefits the logistics sector. As India seeks energy independence, it may develop distinct technological solutions."
This assessment informs Daimler's flexible approach to fuel technologies in the Indian market, including in the future.
"Hydrogen will play a role, alongside continued diesel use," Deppen predicts. "Battery electric vehicles are suitable for light-duty applications, while hydrogen shows potential for long-haul heavy-duty transport." This diversified approach allows Daimler to cater to various market needs while preparing for future technological shifts.
However, Deppen also acknowledges the challenges ahead, particularly regarding infrastructure for battery technology in commercial vehicles. Drawing a parallel with the European market, he adds, "The concerns about battery electric technology in Europe are also relevant in India. A range of technologies will be necessary for India's progress."
In line with this multi-fuel approach, Daimler India Commercial Vehicles (DICV) has taken concrete steps towards innovation. The company has developed a BharatBenz hydrogen fuel cell concept coach in collaboration with a major Indian conglomerate, demonstrating its commitment to exploring alternative fuel technologies. Looking to the future, DICV intends to introduce trucks across various utility segments to meet different freight and terrain requirements, further diversifying its product portfolio.
While Daimler remains open to future collaborations on alternative powertrains such as CNG, LNG, and hydrogen, Deppen maintains a cautious stance, remaining non-committal on specific plans. This measured approach allows the company to remain flexible as market conditions and technologies evolve.
Market Position and Performance
The effectiveness of Daimler's multi-faceted strategy is becoming evident in its market performance in India. Current sales data provides insight into the company's market position: construction tippers account for a significant 40% of DICV's sales, with the company holding a solid 8.2–8.5% share in the competitive heavy-duty truck segment.
Drilling down into specific market segments reveals areas of particular strength for Daimler. In the tipper market, the company's share increases to 15%. Even more notable is DICV's dominant position in the high-horsepower mining tipper segment, where it commands over 50% market share, highlighting the company's ability to excel in specialised markets.
The success of Daimler's approach is further reflected in DICV's performance for 2023. The company achieved a 13% year-on-year growth in sales volume, encompassing both domestic sales and exports. This growth in volume was accompanied by a 21% increase in revenue, indicating not just increased sales but potentially higher value per sale as well.