311,000 buses were sold worldwide, an increase of 2% compared to the previous year. Whereas business was booming particularly in Latin America, the bus market in Western Europe remained in a slump because of the financial and debt crisis. Market development was similarly negative in North America, which, like its Western European counterparts, suffered from public sector budget constraints and therefore from substantially fewer calls for bids.
Strong sales increase in growth markets
The main reason for the rise in sales at Daimler Buses was the increased demand in Latin America, where the division boosted sales of Mercedes-Benz brand chassis by 8% to 25,000 units. Sales were also buoyed by purchases made earlier than planned due to the introduction of the Euro V emissions standard in Brazil in 2012. The market share of Daimler Buses in Latin America remained at a high level of around 43% in 2011. Substantial increases were posted in Mexico as well. Business was also good in Turkey, where sales rose by 55% to the record figure of 1,100 buses.
By contrast, Daimler Buses was unable to buck the downward trend in Western Europe and North America. As a result, sales dropped in Western Europe by 17% to 5,900 vehicles and chassis. Sales of city buses once again declined steeply, as the public sector continued to be negatively influenced by budget restraints. The division sold 600 buses in North America, or almost one third less than in 2010. Budgetary constraints were also the defining factor in this market.
“In 2011 we kept pace with the global market as a whole,” says Hartmut Schick, Head of Daimler Buses. “We captured an impressive 12% of the global market, which makes us the world’s Number One bus supplier. More specifically, we clearly maintained our leading position in the core markets.”
Daimler Buses’ revenues and earnings both declined in 2011. At €4.4 billion (2010: €4.6 billion), revenues were slightly lower than in the prior year. These figures are the result of two contrary developments. Whereas the demand for chassis rose substantially, it dropped considerably for complete buses, which generate significantly more revenue per bus. This development therefore had an even bigger impact on earnings than on revenues, and EBIT declined from €215 million to €162 million. “2011 was clearly a chassis year, while the business with complete buses was very sluggish, particularly in Europe,” comments Schick.
"We've got the right strategy"
Even though Daimler Buses’ return on sales dropped to 3.7% in 2011 (2010: 4.7%), the division’s target for 2013 remains at 6%. “We have the right strategy, and we will systematically pursue it,” says Schick. A key element of this strategy is the GLOBE 2013 growth and efficiency offensive. This “fitness program” will be rolled out at all locations and along the entire value chain. “We will leave no stone unturned and make sure that nothing is omitted,” states Schick.
One of the aims of this strategy is to more strongly interlink the European production network, which has locations in Germany, Turkey, and the Czech Republic. The two German bus plants in Mannheim and Neu-Ulm will remain an integral part of this network, which is why the division invested extensively there in recent years as well as in Hosdere, Turkey.
“GLOBE 2013 will further increase the competitiveness of the German locations. We are making Mannheim and Neu-Ulm sustainably fit for the future. Daimler Buses is the only major bus manufacturer to remain faithful to Germany as a production location,” says Schick.
As part of GLOBE 2013, Daimler Buses will exploit existing growth potential in its traditional markets and further expand its business operations into new ones. In response to the introduction of the Euro VI emissions standard, the division is launching a product offensive in the city bus segment as well as in the coach market. Daimler Buses’ Travego Edition 1 is the first Euro VI-compliant coach. “Our products precisely meet our customers’ wishes, and we will systematically exploit growth potential,” says Schick.
City buses in India — chassis in China
Big growth opportunities are also offered by new markets such as India and China. After having introduced two travel coach models in India since 2008, Daimler Buses is now launching the first Mercedes-Benz city bus there. India is the world’s second-largest bus market, with a current volume of about 46,000 buses per year. Experts predict that this volume will grow to around 80,000 units in 2020.
By then, the bus market in China is expected to increase from its current level of more than 100,000 units to around 150,000 units. Daimler Buses is taking a multi-track approach in order to exploit the opportunities in China. The division will begin selling chassis in the country this year. In addition, Daimler Buses will talk with the Chinese company Foton about joint projects. Foton and Daimler are already cooperating in the truck sector. The two companies are partners in the joint venture company Beijing Foton Daimler Automotive Co., Ltd., which produces Auman brand medium-duty and heavy-duty trucks in China.
Daimler Buses expects sales to be negatively affected by the introduction of the Euro V emissions standard in Brazil this year, whereas business will probably improve slightly in Western Europe.
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