The CEO of the new Daimler-Toyota truck making joint venture, Archion, Karl Deppen has come out swinging against the growing global onslaught of Chinese trucks on established brands saying that brands such as Archion’s Hino and Fuso can slow China’s relentless push by pitching to customers on the basis of the extensive dealer based repair and maintenance networks.
Deppen told the Financial Times that the advance of Chinese truck makers into developing Asian markets will face much bigger challenges than their electric car equivalents, which have flooded the markets with low-cost models.
“Our industry is very different from the consumer car market, because as we have a very strong focus on our service network,” Deppen said.
The Archion boss cited the fact that the company has a global sales and service network of more than 3,700 locations.
“Because the brands are known, everybody knows parts are available, the service is ready and that is an unknown factor for an unknown brand,” Deppen added.
“The issue of aftersales service quality came to the fore after disastrous floods in Thailand in September, while Toyota, the world’s biggest seller of cars by volume, rapidly rolled out repairs and parts discounts through its dealers in the country, Chinese EV maker BYD responded more slowly,” he said
“Toyota’s decades-long investment in dealerships, service networks, spare parts logistics, financing and customer relationships remains a significant competitive moat,” he added.
The Financial Times article also quoted some analysis by financial and business consultancy Bernstein Analysis, which noted in October month that established Japanese brands have built a type of moat around their markets.
“Toyota’s decades-long investment in dealerships, service networks, spare parts logistics, financing and customer relationships remains a significant competitive moat,” Bernstein analysts said.
THE FT also quoted UK-based truck market forecaster KGP, which said that Chinese truck makers are seeking to challenge that ‘moat’ and that they have quadrupled their exports of vehicles over six tonnes to almost 420,000 units since 2021.
The article also identified that large volumes have also gone to Russia after the full-scale invasion of Ukraine in 2022 led to parts shortages among local Russian truck makers, Kamaz and Gaz.
However the tightening of trade measures by Moscow in a bid to fend off the import surge has resulted in Chinese companies going on an export offensive in Africa, south-east Asia, the Middle East and Europe.
Japan, which is the market leader in south-east Asia, saw its share of truck sales in that region fall from 68 per cent in 2023 to a little over half last year, while China’s share jumped to 39 per cent, according to data provider Mobility Global.
Chinese trucks, including diesel and electric models, have become attractive to buyers for their lower price tag and improving quality.
The FT article pointed to the fact that China has made particularly strong inroads into Indonesia’s mining industry, where charging infrastructure and servicing can be more easily managed. To strengthen
The story also suggested that the formation in April this year of the joint venture between Toyota and Daimler, Archion came about in part to strengthen Japan’s truck industry against Chinese competitors.
The parent companies each hold a quarter stake in Archion and in statements it has forecast that it is planning to increase truck sales and revenue by almost 30 per cent to 280,000 units and $AUD 25.3 billion ($US 17.8bn) by 2032.
Archion said it hopes to improve profitability by manufacturing 85 per cent of its trucks on shared platforms where different models can use the same parts. However despite this the FT article points to the fact that the combined sales of Hino and Fuso have already slumped by about 40 per cent from a 2018 peak when 367,000 units were sold globally, partly because of the engine and fuel certification fraud scandal at Hino.
The story also quoted the chief executive of Chinese battery maker CATL, Robin Zeng, who’s company has launched a battery for trucks, and who has estimated that half of China’s truck fleet will be electric within three years, a trend which he says has gained momentum from higher diesel prices.
The story also speculated that should the industry shift further to battery-powered models, then China is expected to have a technological and cost advantage.
However it does point out that the majority of Chinese truck exports are still diesel-powered trucks and that a lot of customers remain unconvinced as to the viability of electric trucks.
Karl Deppen pointed out that options such as biofuels and also hydrogen, which Archion is working on through both parent companies, Daimler through its Cellcentric operation in Germany, and Toyota with its long standing Mirai hydrogen fuel cell technology
“We will see in other markets that the development is following a different pace and may also see different solutions,” Deppen told the FT article.
“We will see in other markets that the development is following a different pace and may also see different solutions,” said Deppen, referring to options such as hydrogen, which Archion is developing, and biofuel.
The story also quoted the head of Asia automotive research at Goldman Sachs, Kota Yuzawa, head, who said that truck electrification was unlikely to proceed as quickly outside China pointing to the fact that battery-powered models have to sacrifice up to 10 per cent of their carrying capacity, compared with similar diesel trucks, thanks to the added weight of their batteries.
Yuzawa agreed with Deppen that Archion’s dealership network would be “very hard to replicate” and would create “a certain barrier to entry” in south-east Asia, however he cautioned that “it’s not an easy job to protect the market”.
