Asia To Africa Strategy Paying Off For Daimler Trucks
When Daimler Tucks Asia announced in June 2013 that it would export trucks from India to Africa, BMI suggested this could be a cost-effective alternative to domestic production in the region and that given the growth of the Asia to Africa shipping route, we would expect to see more autos trade in this direction (see 'Daimler Trucks Taps growing Trade Route', June 5 2013). This view has been supported by Daimler Trucks Asia's announcement that its sales in Africa for the first two months of 2014 doubled year-on-year (y-o-y) and it will be continuously adding to the number of export markets.
The strategy began with Kenya, which we see as a good measure of success, given that the commercial vehicle (CV) market in the country is highly competitive and several manufacturers have invested in domestic production to achieve an advantage. By joining forces between Daimler India Commercial Vehicles and Mitsubishi Fuso Truck and Bus, Daimler Trucks Asia is able to sell trucks from the Fuso brand, which is well established in Africa, produced at Daimler's plant in Chennai, India and exported under its 'Asia Business Model'. This is also linked to our view that Chennai is well placed to become an autos export hub, with its port infrastructure being one of the key factors (see 'Car Carriers In Sweet Spot Amid Asian Exports Boom', February 25).
In January and February 2014 combined, the company sold 1,060 units in Africa, compared with 580 in the same period of 2013. This also surpasses the 1,100 units sold in Q113. The number of export markets has also grown with Zambia and, most recently, Tanzania, added to the African destinations.
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