Daimler’s BharatBenz India sales slip 35%, but company says it is making profits

Daimler India Commercial Vehicles, the German manufacturer of BharatBenz range of trucks and buses, has seen sales plummet 35 percent to 13,200 units from January to November 2019 as a slowdown crippled demand for such vehicles.

The company competes head-on with Tata Motors, Mahindra & Mahindra, Ashok Leyland and VE Commercial Vehicles in different segments.

DICV is present only in the medium and heavy duty segment. According to a senior company official, sales of the medium and heavy commercial vehicle segment recorded a 34 percent year-on-year fall to 249,000 in 2019. There are expectations that the segment will end last year with sales of 220,000 units.

2018 marked the best year for DICV in terms of sales, but the underperformance in 2019 has pushed its overall performance to lower than 2017 when it sold 15,200 units during the same January to November period.

Since its entry in India in 2012, BharatBenz has clocked domestic and export sales of more than 100,000 and 30,000 units, respectively. DICV commanded 11 percent share in Daimler’s Asia sales in the period under review, down from 14 percent in 2018.

Daimler Trucks’ Asia sales fell 18 percent year-on-year to 121,900 units in January to November 2019. Daimler Trucks’ worldwide sales fell 4 percent to 446,800 units. The exact sales figures for 2019 will be shared on February 11.

The severe contraction in demand has not forced DICV to slip back into the red after having logged profits in 2018 for the first time ever since starting operations in India.

Satyakam Arya, MD and CEO, DICV, said he cannot share financials. "I can assure you that we have not slipped back (but) we have moved forward. We have been able to keep ourselves profitable,” he stated.

On January 27, DICV unveiled a range of trucks and buses upgraded to Bharat Stage VI (BS-VI) emission norms. Sales of these commercial vehicles will begin after BS-VI fuel is made available by the government after April 1. The company has also warned of a 10-15 percent price hike due to the changeover.

Due to implementation of new axle load norms, which led to creation of excess capacity in the market and tighter lending norms by banks and NBFCs, the commercial vehicle industry suffered its worst breakdown in years.

The management said DICV will be expanding its touchpoints to 300 by December-end from 237 at present and prepare for over three dozen new variant launches during the year.

"We are expecting a 10 percent contraction in sales in 2020 due to BS-VI implementation. As per our discussions with fleet owners, there is 25 percent excess capacity in the market. There will be some advanced buying in Q1 (January-March) CY20 to avoid the BS-VI hike. Its only in Q3 and Q4 that we expect some recovery and a full recovery in 2021," Arya added.