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Daimler Trucks face Chinese competition in Iran after Africa

 
 

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Bloomberg, 23 February 2016

Germany’s Daimler AG, seeking to retake its position as one of the leading truck-makers in Iran, is bracing for competition from Chinese rivals as sanctions on the market are lifted, it was reported.

“The chairs we used to sit on in Iran weren’t left empty when we were gone. Chinese competitors now sit in these chairs,” said Wolfgang Bernhard, head of Daimler Trucks, quoted by Bloomberg.

The German automaker has acted fast to re-establish its presence in Iran, and last month signed an initial agreement with the state-owned Iran Khodro Co., the country’s biggest auto producer.

Daimler now sees demand in Iran eventually on par with Turkey at about 40,000 trucks a year. Prior to stopping business in Iran in 2010 amid international sanctions, Daimler sold as many as 10,000 vehicles there annually.

The manufacturer now has its sights set on countries like Iran to offset weak sales in more established markets, like North and South America. Truck demand in North America is weakening amid a manufacturing slowdown, while the recession in Brazil has dealt a severe blow to sales of heavy vehicles – a factor that Bernhard says might force Daimler into layoffs.

In a statement on its website, Daimler noted that sales in Brazil plunged by nearly half - 49% - last year. Other key markets like Indonesia also fared far worse than expected in 2015, with demand plummeting by 32% compared to the previous year.

Meanwhile, the once-booming market in China has also slowed down, forcing Chinese companies like Dongfeng Motor Group Co. to expand overseas.

“The difficult market conditions we’ve seen last year have become more difficult,” said Bernhard. The Daimler executive also sees Chinese manufacturers making inroads in Africa, where the company is looking to step up sales.

Despite challenging global market conditions last year, Daimler Trucks reported a 32% growth in sales and operating profit for 2015. For 2016, the manufacturer expects demand for medium and heavy-duty trucks overall to decline slightly, anticipating a slight increase only in Europe.

In North America, the medium and heavy-duty truck segment is forecast to contract by about 10% in 2016, Daimler Trucks said. The outlook for Indonesia and Brazil is also gloomy, with the latter’s market for trucks predicted to shrink even further – probably by about 10%.
Bloomberg
23 February

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