Equipment

Daimler: Mexico a 'Land of Opportunity'

December 09, 2016

By John G. Smith, Today's Trucking

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Daimler Trucks North America sees opportunity in Mexico -- but challenges include new emissions standards and volatile currency. Credit: Mexico Secretaria de Comunicaciones y Transportes
Daimler Trucks North America sees opportunity in Mexico -- but challenges include new emissions standards and volatile currency. Credit: Mexico Secretaria de Comunicaciones y Transportes

PUERTO VALLARTA, MEXICO – In a year when dealers in the U.S. and Canada face a dramatic downturn in truck sales, Mexico is a world apart. As of November the market for Class 4-8 vehicles was up 18.5%, and Daimler Trucks North America accounted for 36% of it – up 7.8% over last year.

But Stefan Kurschner, president and CEO of Daimler Vehiculos Comerciales Mexico, says there’s room for more.

“It’s a country which has its problems, but it is a land of opportunity as well,” he said Thursday in a briefing to media from across North America.

The year-to-date sales of 30,190 Class 4-8 trucks – 26,890 of which were Class 8 models – is still a fraction of what the country should require, he said, suggesting the market could handle double those volumes. The average age for a truck in Mexico is also 17.8 years; more than 150,000 vehicles on the road today are still over 20 years old.

There are undeniable economic challenges, though. Mexico's Gross Domestic Product will grow by just over 2% this year. And the peso continues to struggle in the face of low oil prices.

Daimler is offsetting the currency challenge by setting prices in pesos, unlike other manufacturers in the market, and guaranteeing the prices for six months at a time. Prices had been set in U.S. dollars until as recently as 2015, leaving dealers to account for shifting exchange rates in quotes and when filing taxes.

“It was very, very complicated,” said Fernando Zapata of Zapata Camiones, a dealership group with 558 employees. But the peso pricing has simplified the issue, and is playing a role in Daimler’s growing market share, he added.

Many customers collect their revenue in pesos, Kurschner says. “If they earn pesos, they want to pay in pesos.” Daimler, meanwhile, has access to financial instruments that can help to hedge against currency shifts.

But there are other challenges ahead.

Modernizing Emissions

Mexico is also preparing to move from EPA '04 emissions standards to EPA 2013 technology. The draft rules were unveiled only weeks ago, but could take hold as early as 2018. And there is still work to do before that happens. Ultra Low Sulfur Diesel, widely available in Canada and the U.S. where it's required to enable the use of modern diesel aftertreatment technology, is not available everywhere in Mexico. Local governments also set up their own emission-related rules, Kurschner said. Some larger cities have restricted truck access in a bid to tackle pollution.

Drivers and mechanics alike will need to be educated about the new standards, Kurschner said. The change could also lead to a “pre-buy” if fleets rush to buy EPA '04 equipment to delay the higher costs associated with the newer generation of equipment.

“That’s obvious with every emission change,” he said.

Mexico does have an incentive program for those who want to scrap old trucks, but it is very bureaucratic, Kurschner added, noting how Daimler has applied it to about 1,000 vehicles.

This content appears courtesy of an editorial partnership between HDT and Canada's Today's Trucking magazine.

Comments

  1. 1. Mike [ December 12, 2016 @ 04:12AM ]

    Of course it is a land of opportunity, all of our US manufacturing is now located there, for now.

  2. 2. Charlie Brown [ December 12, 2016 @ 05:43AM ]

    as far as emissions are concerned, it might help if drivers would cut their engines off. I work around a bunch of candy asses that never cut engine off and keep them on fast idle even if ideal temperatures and I wonder if they are running heater or air conditioner.

  3. 3. CT [ December 12, 2016 @ 07:13AM ]

    Of course production is up year over year in Mexico. All of these jobs used to be in the US until Clinton came in with his NAFTA and set up the US housing to tank a few years later after leaving office. Obama continued to devolve the economy with his disastrous policies and even tried to give the US the fatal coup de'tat with TPP.
    Watch what happens when these jobs have to come back to the US...

 

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