Flexible in Approach, Firm on Results

Bharat Benz: Strong Start in Difficult Times

Daimler India Commercial Vehicles (DICV) has begun well but will it have the firepower to defeat Ashok
Leyland and Tata Motors in a market long been dominated by these biggies?

Bangalore, January 2013

© 2011 RedSeer Consulting Confidential `and Proprietary Information www.redseerconsulting.com Query@redseerconsulting.com

Current study evaluates the potential of Bharat Benz toppling Tata and
Ashok Leyland in the MHCV market

Competitive Assessment

Importance in  Fuel Efficiency: With rising fuel prices,

WINNER
Buying Behavior superior fuel efficiency has become even more
important. Leyland is planning to come up with
Fuel Efficiency Bharat Benz 9.3
their latest Neptune engine to better B.Benz
Technical Standards Bharat Benz 9.1  Brand: Even with Benz brand, it will take
sometime for Daimler to meet the reputation of
Reliability and
Bharat Benz 9.0 Tata in the CV industry
Durability

Parts Availability Tata Motors 8.6  Price: Price charged is only 5% premium to
the top-2 players. However, Tata and ALL have
doubled their discount in recent times. The
Price Tata Motors 8.6
premium is now 10-15%
Brand Reputation Tata Motors 8.4  Reliability Promise: Even though B. Benz is
making the right noises on reliability, the
Network Reach Tata Motors 8.0 market will take sometime to evaluate its
actual performance

Our Opinion: First look suggests that B.Benz has strategically

focused on the right factors to disrupt the market.

Source: Dealer and Customer Interviews; RedSeer Analysis

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Bharat Benz has started sales at a time when the market is expected to
contract for the first time in five years

Sales of MHCV - Goods Carriers Market by Tonnage

(in ‘000 units), FY2009-FY2013E FY2011, # of Units, Growth

Growth (%)
CAGR = +19% GR = (11%) 3% 0% 11% 136% 32% 10%
FY06-FY11
31%
299
275 266

22%
202 20%
175
16%

6%
5%

FY09 FY10 FY11 FY12 FY13E 25T 16T 9T/12T 31T 35T 40T/49T

Rigid or Tippers Trailers

Source: Dealer and Customer Interviews; RedSeer Analysis

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Sales rolled out in September 2012 with 25T and 31T rigid and tipper
models
Bharat Benz Product Landscape
Key Products Across Categories Key New Features

Rigid Light Duty: 914, 1214  Instrument Cluster: Fuel Mileage,

Trucks Heavy Duty: 2523, 3123 distance to empty and efficient driving
indicators
Tippers 1217, 3128, 2523, 2528  Cabin Comfort: Wider berth and twin
helper seats including sleeper cabins

Trailers 4928 (6X2/6X4)  Maintenance: Longer maintenance and oil

change periods

 Tippers segment grew 39% in FY12,
compared with overall MHCV segment
growth of 8-9% despite weak mining
activity across India
 Trailers is the smallest segment in the
MHCV category and with upcoming 37T
rigid trucks this segment is further
expected to go down
 Safety: Features (such as ABS, inter-
wheel differential lock and constant throttle
valve engine brakes)
 Other Services: Fleet management
systems, maintenance contracts, financial
services

Source: Dealer and Customer Interviews; RedSeer Analysis

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Bharat Benz products have superior technical specifications than Tata
and Leyland
Key Product Comparison – 25T Rigid

BharatBenz Tata Leyland

2523 Rigid LPT 2518 2516iL

230 hp@
Peak Power 176hp@2250rpm 160hp@2400rpm
2200rpm

810 Nm @1200- 647 Nm@ 1350

Torque 550 Nm@1500-1700 rpm
1600 rpm Rpm

Clutch Plate Diameter

395 Not Available 380
(mm)

Gradeability 23% 23% 19%

Top Speed (kmph) 90 70 70

Cowl Available NO YES YES

Price (in Lakhs) 17 16 16

Fuel Efficiency +10%

However, players such as MAN have failed previously despite

having superior offerings.

Source: Dealer and Customer Interviews; RedSeer Analysis

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Manufacturing facility is located in the Chennai automotive hub with a
high parts localization of 85%
Plant Details Parts Localization

Part Module Distance from Plant

Wheel Rim 50KM

Glass 35KM

Transmission Housing 30KM

Wiring Harness 20KM

Cooling System 20KM

Leaf Springs 20KM

Axles 20KM

Seat 15KM

 400 acre facility at Orgadam Chennai, right Dashboard, trims 10KM

opposite Renault Nissan Campus. Built in a Cab in white (CIW) 2KM
record time of just two years
Frame 2KM
 6 KM test track with varied terrain
 Current part localization at 85% estimated to go up
 Overall capacity of 36,000 trucks per year
to 90% by 2014. Remaining 15% mainly comes from
expandable to 72,000
Germany followed by Japan
 Total Investment of INR 4,400 crores over two
 Around 40% of the total components are sourced
years. Further investment of INR 1,500 crores
from Tamil Nadu
was announced in early FY13
 Supplier network to grow to around 450 vendors

Source: Dealer and Customer Interviews; RedSeer Analysis

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Marketing strategy has focused on reliability and promise to ensure a
better connect with the customers

Positioning Statements Marketing Initiatives

 Quarterly Smart Trucking Magazine

Reliable

Efficient and
Smart

 Bharat Benz Power Yatra: During early 2012, a

convoy of six Bharat Benz trucks drove through the
golden quadrilateral (around 8000 kms) in 71 days
interacting with drivers and fleet owners
Powerful
 ProServ: After-sales initiative to deliver reliable trucks
that spend longer time on the road

 Bharat Benz Financial: A captive financial arm that

will provide funding commercial vehicles purchases

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Bharat Benz has already opened dealership across 26 locations India
and plans to expand to 100 locations by the end of 2014
Current Dealership Network

Leyland to Lose Market Share:

Predominant initial focus of Bharat
Benz being in South India, we estimate
that Ashok Leyland will be the one to
lose out maximum share due to the
launch of Bharat Benz.
Sonepat

Advanced Tools: Bharat Benz has

come up with some unique tools such
Ahmedabad as advanced vehicle diagnostics to
Jamshedpur
anticipate problems in advance and
Vapi Surat emPower tool which is used to
Indore
Rajkot Veraval Chandrapur Balasore understand customer requirements
Panvel Behrampur and recommend suitable trucks
Vasai Pune
Hyderabad Vizag Faster Paper Work: As was pointed
Chitradurga out by a few customers that ensuring
Vijaywada
Hubli that all the processes (including the
Bangalore Financing Arm Bharat Benz Financials)
Chennai meant quick clearance of paperwork
Madurai
Coimbatore
Salem
Kochi Tirunelveli

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Some insights from research
On Future Prospects: “BharatBenz LDT
range will offer quicker turnaround time
and the lowest total cost of ownership. In
the coming months, we will strategically
release our products in the market that will
include LDT and HDT range."-- Mr. Marc
Llistosella, MD & CEO.
On integration of best technologies:
“Our manufacturing hub at
Oragadam,..has the right mix of
German design genius, Japanese
efficiency and a fine balance between
automation and manpower” –Mr. Vijay
Tuli, VP, Operations & Manufacturing.
After Sales Mechanism: “When we
were developing the BharatBenz truck
range we made a very conscious
attempt to also develop an after-sales
mechanism, which would ensure your
trucks were always on the move,”– Mr.
Ramesh, AVP & Head-After Sales
Our Opinion: B.Benz has definitely disrupted the market with superior offerings
and promise of excellent service. We expect B.Benz to garner a sizeable share
of 4-8% share in the MHCV by the end of 2014.
Source: Dealer and Customer Interviews; RedSeer Analysis
Delivery Time: “The stand out
feature in this dealership was the
processing of paperwork, which
only took a couple
of days” -- B. Benz Customer
Convenience for Drivers:One of the
most challenging task is to gain a
driver’s trust as he is curious about
what the dealership technicians are
doing to his truck or what parts are
being replaced. So to iron out their
doubts the drivers lounge has a
viewing gallery outside, which
overlooks the working bay,” -- B. Benz
Dealer
Benefits of Radial Tyres: “On
mountains, I find it very easy to control
my truck on turns. I don't have to slow
down to a dead pace and can control
my truck at decent speeds, which also
helps me in maintaining a better
mileage.” –Himmat,Truck Driver
Marketing:“BharatBenz trucks’
state-of-the-art dealership network.
This network will offer complete
sales consulting, 24X7 after-sales
service with advanced interactive
vehicle diagnostics, roadside
assistance for best service reach.”
– Mr. V.R.V. Sriprasad, VP,
Marketing Sales & After-Sales
On High Demand for CVs:“Greater
scale across the Indian CV industry
will lead to a more optimal cost
scenario at the vendors’ end. This will
translate into the use of Indian
manufacturing plants to export
vehicles, ”-- Pisharody
On reaching critical mass:"Our
intentions were very clear—to
provide a much needed boost to
India’s logistics system through our
trucks, which are equipped with the
most modern technology, but are, at
the same time also cost effective,”--
Mr. Vijay Tuli,
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 Thank You !
“The market is contracting by 22% and we are seeing a historic peak in
discounts. But we should see a revival next year.
If there is blood on the road, you have to start your business!!!”
Marc Listostella, CEO & MD, Daimler India Commercial Vehicles

© 2011 RedSeer Consulting Confidential `and Proprietary Information www.redseerconsulting.com Query@redseerconsulting.com

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