How has the crisis changed the position of the main players, the “big European seven” truck producers? The Director General of Scania – Rus Ltd., Hans Tardell, speaks about this with our magazine.
The Director General of Scania – Rus Ltd., Hans TARDELL, answers questions from our magazine.
Refocusing on new rather than used machinery
— Mr. Tardell, how has the current economic crisis influenced the sales of construction and utility machinery? How did the truck market fare on the whole?
— There is a significant decrease in demand in the segments of construction and utility machinery as well as the cargo vehicles market. Refocusing from imported equipment to Russian and from new to used is taking place.
At the same time, according to Avtostat Information, sales of imported trucks on the used truck market are growing. On the whole, the segment of new trucks weighing more than 16 tons fell by 51.4% during the first three quarters of 2015.
For the first 9 months of 2015 the “Big European Seven” automobile producers sold 59.6% less than during the same period in 2014.
— How do Scania's key figures look as compared with your rivals from the “big seven”?
—Scania’s results are better than the average figures of the “big seven” as well as better on the whole in the segment of imported vehicles. Scania also continues to occupy the biggest share of the market out of the “big seven”. During the first three quarters of 2015 our company sold 1850 vehicles, which is 56.1% less than in 2014. Besides this, with the August and September 2015 results, Scania, together with KamAZ and GAZ, is in the top three for the Russian market in cargo vehicles. In Sepetmber, 2015 our company sold 270 new trucks, and Scania’s share on the Russian market for heavy-duty trucks totaled 10.5% in September and 8.9% for the three quarters.
The fall in demand is caused by business activity decrease
— The main reason for the current crisis on the truck market is the decrease in demand. What should be done to ameliorate this? Where should investments be made? How can the state help Russian producers, including localized ones?
— The situation in all spheres of business depends on the efficiency and steadiness of macro-economic processes. The fall in the heavy-duty truck market is caused by construction decrease, cargo traffic activity volume decrease, and companies’ business activity decrease.
Support with the programs of preferential auto lending and leasing is, of course, useful for Russian producers, but the result of such measures is of a local and short-term nature. From our standpoint, it is necessary to mobilize the inner resources of the companies, to optimize business processes and to support the existing loyal customers in efficiently withstanding the crisis.
Scania-Rus has never sought state help. We have always relied on our own forces and implemented a strategy based on the reasonable balance of local production, imports of the most in-demand models of machinery, and partnerships with the leading Russian players.
— Is the localization of your products in Russia helpful during the crisis? How is your Scania-Piter plant producing trucks?
— When Scania opened the production unit at the Scania-Piter plant, we were actively looking for Russian deliverers of auto components. However, we managed to find just a few partners. The main problem of localization in Russia is the quality of components and the small volumes that we can order. Taking into consideration the current condition of the market, we took a decision to integrate the Russian production of Scania and MAN in one location in Saint Petersburg to reduce production expenditure.
Of course, the interaction factor within Volkswagen was taken into account, including the sphere of procurement and technological development.
Such industrial integration will not influence Scania’s pricing policy or our model line. All commercial operations of both brands will remain independent.
Optimal decisions must be offered to customers
— What strategies and business methods allow for the relief of the negative influence of the crisis without losing traditional customers? Does your company take part in equipment delivery for large-scale infrastructure objects in Russia?
— Currently, producers of automobile machinery are in a difficult situation. The situation with dealers is even harder. However, the customers suffer worst of all. That is why all efforts should be focused on their support, and it is important to create long-term partnership relations. It is necessary to offer customers optimal new decisions, with which they will be able to get the most from the operation of their truck fleet.
The efficiency and reliability of the machinery is also very important and creates a basis for minimal operational expenditures.
Besides this, it is necessary that service centers should have optimal service as part of an integral complex offer, and that they should act quickly, guaranteeing the minimum downtime, a durability increase and second-hand value growth.
— When, do you think, may we expect to see positive dynamics on the truck market?
— Economic forecasts for 2016 – 2017 are controversial. We do not think that in 2016 the cost of oil and other primary materials will return to an acceptable level. The cost of borrowed finance for the corporate sector will stay at a high level. So we expect that market volume in 2016 will be the same. The market’s recovery and achieving a pre-crisis level of sales are likely to happen in 2017—2018.
Leasing and rent are in demand during the crisis
— The interest in renting and leasing schemes is growing in these crisis conditions. How actively do you use these instruments?
— Absolutely right. The interest towards such complex offers is very high now. On July 1st, 2015 we launched our new complex offer, ‘Scania Drive’. It provides for both leasing financing of Scania vehicle purchase and service support in the Scania dealership network, insurance and protection of the field line for up to 4 years, as well as a ‘Control’ package for the Scania truck fleet monitoring system and the training of two drivers in Scania’s driver school.
A customer signs a contract with a single deliverer, pays one bill and saves time on document turnover. The main advantage of Scania Drive is the financial benefit resulting from the efficient complex control of the truck fleet, which is 5% of the total cost of a vehicle and the service complex.
The popularity of the program surpassed all our expectations.
Another (at present, pilot) offer is the project ‘Scania – Rent’, which is relevant on the current market. ‘Scania-Rent’ is aimed at giving timely help to customers who need trucks for short-term operation.
Scania dealers taking part in the pilot program provide for the rental of the SCANIA Streamline R440 LA4X2HNA truck/tractor for a term of 1 month to 1 year. The cost is calculated from the planned term of the vehicle’s operation and is paid monthly by fixed payments.
Besides this, the rental cost includes ‘Theft & Damage’ risk insurance for an unlimited number of drivers, technical services, and maintenance work from any Scania official dealer center.