MAN Nutzfahrzeuge masters the crisis
Resolute reaction to collapsing demand for commercial vehicles shows results. Truck business has stabilised. MAN's share of European market slightly up. Prerequisites for global growth fulfilled.
The global recession continues to determine the development of the international market for commercial vehicles: lower industrial production, the falling volumes of global trade and a dwindling willingness to invest have led to a drastic reduction in the demand for commercial vehicles. All this has led to considerable reductions in incoming orders, sales and the result for 2009 relative to the previous year.
The fast, flexible adjustment of production to match the development of the order situation, a rigorous cost-cutting policy and concentration on measures to reduce stocks of vehicles and stabilise the Aftersales business have been successful in cushioning the effects of the negative developments in the market.
In addition to managing the current crisis, MAN Nutzfahrzeuge, together with its partners, has pushed ahead with its successful international growth strategy, which will ensure the leading supplier of commercial vehicles and transport solutions a solid platform for the coming upswing.
Results of fiscal 2009
In the 2009 fiscal year, incoming orders totalled €5.2 bill., 43% lower than in the previous year (€9.1 bill). Sales decreased by 40% from €10.6 bill. in the previous year to €6.4 bill. in 2009. Due to this considerable decrease in sales, increased provisions for risk in the buy-back business and charges resulting from stock valuation and despite the cost-cutting program, it was not possible to achieve a balanced result (– €49 mill., previous year €1,055 mill.). Return on sales was – 0.8% (10.0%).
Truck Division: As a consequence of the financial and economic crisis the European truck market halved in 2009, from around 410,000 to 220,000 units (– 46%). MAN Nutzfahrzeuge was able to increase its market share of trucks over six tonnes slightly, from 16.6% in 2008 to 16.7% last year. The number of trucks ordered dropped by 52% from 68,872 to 33,272. Incoming orders for heavy trucks were down 54%. During the course of last year, MAN Nutzfahrzeuge delivered 40,535 trucks, which is 58% fewer than in 2008 (96,478). Sales were down by 44% to €5.1 bill. (€9.1 bill.), and the operative result was down by €1,126 mill. to – €89 million.
Bus Division: The European bus market was much less affected than the truck market by the financial and economic crisis in 2009. The volume of registrations decreased by not quite 12% to around 30,500 units (2008: 34,970). The biggest decreases were seen in the coach market (– 31%), followed by the market for intercity buses (– 13.5%). The city bus segment reversed the trend and exhibited a slight growth of almost 4%. MAN Nutzfahrzeuge was able to gain a considerably bigger share of the bus market, improving from 12.8% to 14.8%; the city-bus business made a particularly important contribution here. Incoming orders for the Bus Division decreased by €404 mill. (– 28%) to €1.0 billion. In all, 4,712 buses (6,625) were ordered. During the course of last year 6,232 buses (2008: 7,227) were delivered to customers, sales dropped by 14% to €1.3 billion.
The operative result for the Bus Division rose by €21 mill., from €19 mill. the previous year to €40 mill., mainly due to the restructuring program initiated in 2007. The operative result is also affected by several major orders: the Abu Dhabi Department of Transport ordered 400 city and intercity buses from MAN, of which 250 were delivered in 2009. Another major order was landed by MAN Truck & Bus (S.A.) (Pty.) Ltd., Johannesburg, South Africa: 110 MAN Lion’s Explorer intercity buses were ordered by the state-owned PRASA (Public Rail Agency of South Africa) to carry football fans to the stadiums during the 2010 World Cup. During 2009, 66 of them were delivered.
Reducing costs, consolidating strengths
MAN Nutzfahrzeuge used "the good years" to increase productivity still further, to reduce manufacturing penetration and to make the administrative processes more efficient. Moreover, big investments were made in production facilities, new technologies and products, as well as in the world-wide Sales and Service network: these investments are standing the company in good stead during the current difficult situation. The reduction in the volume of investment in 2009 to €204 mill. (€492 mill.) takes into account the difficult economic environment.
At the Munich site the modernisation and expansion measures begun the previous year have largely been completed. The Truck Forum - a modern world of experiences focusing on the commercial vehicle - opened last summer and has been a resounding success with visitors and customers. In March this year the Bus Forum is opening in the immediate vicinity. At the Nuremberg site an innovative test bed center for engines will shortly be officially opened; the next generations of engines will be tested here. At the beginning of 2009 a new truck assembly plant went into operation in Saudi Arabia. This plant is designed to produce 3,000 vehicles a year in single-shift operation. In future, MAN Nutzfahrzeuge will serve the Central Asian markets with the jointly-owned JV MAN AUTO-Uzbekistan Limited Liability Company, Samarkand City/Uzbekistan. MAN holds 49% of the shares in the joint venture, while UzAvtosanoat, Taschkent/Uzbekistan, holds 51%. The joint venture will import components for heavy trucks from the MAN TGA and CLA ranges from Germany and India respectively into Uzbekistan, where they will be assembled. In autumn 2009 a new customer center went into operation at the Bus site Posen (Poland).
Last year a total of €211 mill. (€257 mill.) was invested in research and development, equivalent to 3.3% (2.4%) of turnover. On average over the year, 1,769 (1,772) people were employed in the research and development departments around the world. The R&D program was adjusted in accordance with the current situation. In this respect, however, central research and development projects (e.g. the development of Euro 6 engines) remain adequately funded. R&D activities focus on further increasing transport efficiency in order to make the trucks and buses even more economical and eco-friendly and thus contribute to a comprehensive reduction in the total cost of ownership as well as to sustainable mobility. Transport efficiency protects the environment and adds value for the customer.
Employees: Thanks to the high degree of flexibility in production it was largely possible to adjust the production program to the decreased demand shown during 2009. Loan-worker and fixed-term contracts in vehicle and engine production were not extended, time accounts were reduced and the instrument of Kurzarbeit* utilised. *a temporary reduction in working hours with assistance from Germany's federal employment agency to make up part of the resulting shortfall in employees' wage Amongst other measures, the production program was reduced by around 140 days of closure. There were on average 85 days of Kurzarbeit in production and 32 in administration. Similar personnel instruments were used at certain sites outside Germany. Certain areas were exempted from Kurzarbeit: these included all areas in close proximity to the customer (e.g. Service) as well as Quality and R&D. In order to utilise the Kurzarbeit phase advantageously and ready the company and its staff for the challenges that lie ahead, MAN Nutzfahrzeuge has started a wide-ranging program of qualifications for its employees at German sites. The HR Department and the Works Council have put together an advanced training program from which all the industrial workers and most of the salaried staff benefit.
On December 31, 2009 MAN Nutzfahrzeuge had 31,285 employees (36,010). In Germany there were 18,205 employees (19,754) and abroad there were 13,080 (16,256). On December 31, 2009 there were 2,110 trainees (2,187). The proportion of trainees was thus 6.5%.
Consistently efficient. Innovations and products from MAN.
MAN Nutzfahrzeuge combats the increasing cost pressures facing customers with a comprehensive program of transport efficiency. MAN's strategic approach goes far beyond saving fuel. MAN is already offering an extensive program to reduce your total costs of ownership. Transport efficiency, consolidated in the fields of technology, service, the driver and future expertise protects the environment and is added value for customers. Labelled "Consistently efficient", Sales and Service initiatives have been started in the established markets in order to bind Truck and Bus customers more closely to the MAN brand (for example, a transport efficiency check where customers in Germany can have their vehicles checked for efficiency by MAN outlets free of charge).
2010 is going to be an exciting year for buses at MAN Nutzfahrzeuge, with the two bus brands celebrating two important milestones. In March, for the first time ever, the "MAN BusDays" are taking place in the new Bus Forum. Over a thousand customers from around the world will be getting up-to-date information on the latest technologies, products and services for buses. In this framework, the NEOPLAN 75th anniversary celebrations will kick off.
The new MAN TGS-WW celebrates its world premiere at the 29th International Trade Fair for Construction Machinery, Building Material Machines, Mining Machines, Construction Vehicles and Construction Equipment from April 19 through 25 in Munich. The TGS-WW was designed especially for the requirements of customers outside Europe. The MAN TGS-WW continues the success story of the TGA-WW, which has found large numbers of satisfied customers since its introduction in 2003, thanks to its ruggedness, its load-carrying capacity and above all, thanks to the way it copes uncomplainingly with poor roads and extreme climatic conditions. These talents are now combined with the even greater levels of comfort and safety provided by the new TGS-WW, enhancing the value of the vehicle still further and leaving hardly anything to be desired.
At the IAA Commercial Vehicles in Hanover MAN is presenting its international commercial vehicle range and will attract the public with interesting innovations Here, MAN will be showing its environmentally friendly city bus, the MAN Lion’s City Hybrid, to a broad section of the public for the first time. The Hybrid uses up to 30% less fuel than a conventional diesel-powered bus. Also at the fair in Hanover, the new NEOPLAN Skyliner will be celebrating its world premiere.
MAN Rental: With the slogan "Now you can rent success too" MAN began a rental and service campaign last year. MAN Rental makes it possible for operators to cover their needs for modern trucks, trailers and semitrailers quickly and simply. Thanks to a full range of services they can thus concentrate fully on their real business – and with only a minimum of handling and financing input. Last year MAN acquired a majority stake in the truck rental company EURO-Leasing GmbH. In the course of a capital increase this share rose from 25.1% to 50.1%. MAN Nutzfahrzeuge now has the final link in the value-added chain and will participate more actively in truck rental, the market of the future. Above and beyond this synergies can also be utilised: in After Sales, for example, by control over the utilisation of workshop capacity and repairs to trailers and semi-trailers, as well as in the used vehicle segment, by means of an intelligent return and portfolio management. Simultaneously, the service competence of MAN Nutzfahrzeuge will be expanded and customer retention strengthened.
Rheinmetall MAN Military Vehicles (RMMV): On January 12, 2010 MAN Nutzfahrzeuge announced the signing of a contract with Rheinmetall AG, Düsseldorf for the founding of a joint company for military wheeled vehicles. Rheinmetall will own 51% and MAN Nutzfahrzeuge 49% of the new company. The plan is still subject to approval from the competition authorities. The new company, which will be known as Rheinmetall MAN Military Vehicles GmbH (RMMV), is an important provider of complete solutions in the market for military wheeled vehicles, covering the entire range of armoured and unarmoured transport, command and role-specific vehicles for the international armed forces.
International growth and cooperation
The international growth strategy initiated in recent years has resulted in one record year after another for MAN Nutzfahrzeuge. Irrespective of the difficult market situation at present, MAN will continue following this successful strategy. The reason for this is that in the medium term, the demand for transport in the so-called BRIC countries will rise again considerably and their infrastructural expansion will be driven on. In the medium term, then, demand for buses and trucks in these countries will rise correspondingly.
Brazil: With the purchase of Volkswagen Truck & Bus (now MAN Latin America) in Brazil by MAN SE, MAN Nutzfahrzeuge has gained access to the South American bus and truck market. In the course of this year, MAN Latin America's existing network of dealers will initially sell the heavy trucks of the MAN Trucknology Generation® in Brazil, with the adjoining countries following later. In return, MAN Latin America will profit from the know-how of its German sister company, in the area of engines with high emissions standards, for example. Thus in the medium term the economical MAN D08 common-rail engine will also power the VW Constellation. In the long term, the development of joint truck and bus platforms is planned.
Russia: In the past few years MAN Nutzfahrzeuge has been successful in establishing itself on the Russian truck market. During this period, an extended and highly qualified Service network has been built up for MAN's customers in Russia. Due to the currently difficult market situation, the focus is on supporting the Service network.
India: MAN Nutzfahrzeuge has been active on the Indian market since 2006 in the form of the MAN FORCE TRUCKS joint venture in Pithampur. At the end of 2008 MAN Nutzfahrzeuge increased its share of the joint venture from 30% to 50%, and in so doing, took over more responsibility for the continued expansion of activities in India. In the meantime production has been further increased.
China: The entry of MAN SE into partnership with the Chinese truck manufacturer Sinotruk was a strategic milestone. MAN holds 25% plus one share in the leading manufacturer of heavy trucks in China. This gives MAN access to the world's biggest and fastest-growing truck market, where it profits from its Chinese partner's widespread sales network. In return, Sinotruk is able to use the technical know-how of MAN Nutzfahrzeuge. The two partners will jointly develop a truck series based on MAN technology. Sinotruk will market this series in China while MAN will have exclusive marketing rights for the export of these rugged and competitively priced vehicles.
