Q&A: Head of DaimlerChrysler commercial vehicles outlines new goals

Stuttgart. After only three years in office Eckhard Cordes has managed to turn DaimlerChrysler's problem child, the commercial vehicle sector, into a profitable business. Cordes talked to Automobilwoche about business trends and his strategy to deal with price battles in the commercial vehicle market.

Q: The year 2003 is nearly over. What is your impression of how it went?

A: In general, we can be pretty satisfied. The market was weak, as it was during the past three years. However, we did pretty well despite the difficult circumstances.

Q: What does the order situation look like?

A: It is stable, but on a low level. It therefore reflects the general market situation. It looks like the situation will not change in 2004. We have no problems regarding employment. Our staff has adapted to the situation. It is possible that there will be more work due to the new products.

Q: How much of the company's total sales will be represented by your sector?

A: The result will be significantly better than in 2002. Despite making significant progress regarding return on capital, we will not yet meet the target of 13 percent. However, if we receive the necessary support from the markets we will be able to reach it.

Q: Are there any additional trouble spots?

A: There are no longer any large trouble spots, such as Freightliner. We continue to have success with our restructuring programs, which is reflected in our improved results during the past few years, despite little support from the markets.

Q: In western Europe Mercedes-Benz's market share for the weight category more than six tons has decreased. Does that worry you?

A: The slight fluctuations of the market shares are a result of very aggressive price competition. During the past few years, prices have fallen by up to 10 percent. It was, and still is, our aim to stop this price drop - and not to try and be the market leader in western Europe at any cost. And we are getting there, because we see the truck business in the global context. When looking at the worldwide market we are twice as large as our second largest competitor Volvo/Renault. We don't have to be the biggest manufacturer in every single regional market. Our aim is to make sure the price that our customers pay for our products corresponds with the products' value.

Q: Can you tell us how much the price battle cost you in the past four years?

A: Look at our production volume and factor in price drops of, for example, 6 percent and you can easily calculate that we lost hundreds of millions, which we have to compensate for by taking counteractions.

Q: When will the commercial vehicle joint venture negotiations with Hyundai in South Korea be finalized?

A: Definitely not this October. After very difficult negotiations between Hyundai and the trade unions most of the open points have been clarified. There are still some points that need to be discussed. However, we have not set a definite date yet.

Q: Can you explain your strategy for Asia?

A: Due to our 43 percent share in the Mitsubishi Fuso Bus and Truck Corporation we are represented in Japan, and through Beiqi Futian we have representation in China. Soon we will also be in Korea. That way we will cover more than 80 percent of the Asian commercial vehicle market.

Q: When will your involvement show first positive results?

A: Regarding our share in Mitsubishi Fuso we have already reached those positive results. Fuso's business has been very good this year. The engine-joint-venture in Korea is also up and running. The joint venture in China will start in the first half of 2004.

Q: How far are you regarding the restructuring of Freightliner?

A: On a scale from zero to 10, we have reached 10. The restructuring program FLITE is finished. We are even significantly ahead of our schedule regarding our savings target. Freightliner will also be profitable in 2003.

Q: The construction of a new plant in the USA was cancelled. Was this due to low demand for the Sprinter?

A: On the contrary. We decided that our three trucks plants in Germany and Argentina have sufficient capacity to cover demand in the USA. The sales are going according to plan.

Q: So there will be no investment freeze?

A: Definitely not. Our investment budget has not been touched. We will reduce the number of engine ranges from the current four to one. The first engine of the new family will be launched on the market in 2007. We will invest several hundred million in this project over the next few years, which will pay off significantly in the long term.

Q: Does this also apply to the Vaneo? It is said that the small commercial truck from Ludwigsfelde is not profitable and is an outgoing model.

A: The Vaneo has not met our expectations. However, it is not true that there won't be a successor. We will definitely not leave this segment empty.

Q: It is said that you are a candidate to succeed Juergen Schrempp ...

A: I have a very exciting and demanding job, which thrills me every day. I can do this job until my retirement without any difficulty.

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