Daimler : Buses further extends its leading role in a difficult market environment

• EBIT rises by almost 60% to €197 million

• Return on sales of 4.7% best value in the sector

• Record market share in Western Europe

• Substantially more than half of all the new buses in Germany bear the Mercedes-Benz or Setra logo

• Growth and efficiency program GLOBE2013 successfully completed

• Market environment expected to be challenging again in 2015

• Hartmut Schick, Head of Daimler Buses: "In 2014 we once again showed what we're made of. We substantially improved earnings despite facing difficult economic conditions in core markets."

Daimler Buses reached its earnings targets in 2014, achieving a much higher profit than in the previous year. The division increased its EBIT by almost 60% to €197 million (2013: €124 million). And revenues increased by 3% to €4.2 billion (2012: €4.1 billion). With 33,200 (2013: 33,700) units, sales of buses and chassis were almost as high as in 2013. Thanks to the good customer response to Daimler's technologically leading buses, the division was able to substantially extend its lead in the segment of buses over 8 tons GVW in the core markets.

"After we returned to the black in 2013, we once again showed what we're made of in 2014. We substantially improved earnings despite difficult economic conditions in core markets. This development once again made it clear that we offer compelling products and that our business system is so efficient that we can be very profitable in such a market environment as well," says Hartmut Schick, Head of Daimler Buses, about the business development.

The improvement in earnings was mainly the result of increased sales of complete buses as well as of a good product mix in Western Europe, further efficiency improvements from the GLOBE2013 growth and efficiency program, and beneficial exchange rates. The division even slightly exceeded the €200 million earnings improvement target of GLOBE2013. The big increase in earnings caused the return on sales to rise to 4.7% (2013: 3.0%). As a result, Daimler Buses had the best return on sales figure in the sector in 2014.

Daimler Buses achieves record market shares in a difficult market environment

The markets were not helpful to Daimler Buses in 2014. In Western Europe, for example, the market as a whole contracted by 2% to its second-lowest level in 20 years. The market shrank by 0.5% in Germany, where the coach segment benefited from the long-distance bus business. By contrast, demand plummeted by almost 15% in France, and by more than 20% in Italy. Compared to the previous year, market volume decreased by almost 25% in Eastern Europe. The market volume in Latin America was 16% lower than in the previous year, due to the economic difficulties in Brazil and Argentina.

Sales in core markets decoupled positively from overall market developments. Complete business developed favorably for the division in Western Europe. Sales there increased by 13% to 7,600 (2013: 6,700) units, thanks to the very positive response to the new generation of Citaro city buses and to the new Setra TopClass 500 and ComfortClass 500 models. As a result, the division was able to significantly increase the previous year's record market share to 34% (2013: 31%). Sales also rose at a double-digit rate in Germany, where they increased by 17% to 2,865 (2013: 2,440) units. As a result, market share jumped to 57% (2013: 51%). By contrast, sales of buses and chassis declined in Latin America as a result of weak economies in many countries. The division's deliveries in this region dropped to 17,600 (2013: 19,100) units. In spite of this difficult market situation, Daimler Buses managed to increase its already leading market share to 49% (2013: 42%). In Brazil, the market share rose to nearly 50% (2013: 44%), in Argentina a stable 76% were achieved. Sales in Mexico rose by 23% to 3,630 units, and were therefore much higher than in the previous year (2013: 2,960).

For many years now Customers are showing great confidence in the Citaro city bus. In 2014, the division delivered the 40,000th Citaro bus to a customer, making the model the best-selling bus in history. At the same time, sales of Mercedes-Benz minibuses rose above 20,000 units last year. In December 2014, Mercedes-Benz also delivered the 3,000th regular-service bus equipped with the economical generation of Euro VI-compliant engines.

"We were the first bus manufacturer to switch its entire product range to the Euro VI standard," says Schick. "It impressed our customers and boosted our sales in Europe."

The superiority of the Daimler Buses products is demonstrated, for example in their improved fuel efficiency. The fuel consumption of the Mercedes-Benz and Setra buses could be reduced by up to 8% with the introduction of Euro VI in Europe, the Euro V products in Latin America show a reduction of up to 7% compared to the previous generations.

Important innovations and products launched

In 2014 Daimler Buses once again demonstrated its technology leadership. It enhanced its product range with important innovations, which benefit from the division's integration into the corporate network. For example, the Mercedes-Benz Travego coach will be equipped with the Active Brake Assist 3 emergency braking system, which is also used in trucks. This system can automatically initiate emergency braking when a bus is in danger of colliding with a stationary obstacle. Another system that was developed for buses as well as trucks is the flexible new high-performance B2E electronic platform, which involves a very modern network architecture, highly integrated control units and at the same time improves for example displays, switches or steering posts.

The efficiency of buses and trucks is also greatly increased with Predictive Powertrain Control (PPC). On the basis of three-dimensional maps, the system utilizes the peak momentum achieved on downhill grades, reduces the flow of fuel in good time before the summit of a hill is reached, and intervenes in the shifting of the gears in order to minimize fuel consumption. This results in an anticipatory driving style, thanks to the system's perfect knowledge of the vehicle and the route. Fuel consumption can be substantially reduced, depending on the route's topography. In a practical test, the system enabled a Setra TopClass coach to reduce fuel consumption by more than 9% on average.

Another highlight was the world premiere of the Mercedes-Benz CapaCity L in November. This high-capacity articulated bus can transport up to 191 passengers, making it an ideal solution for extremely busy routes in metropolitan areas. Specifically designed for this purpose in the cities of Latin America is the Capachassis. Hundreds of these buses, which measure up to 23 meters, are now in operation. 2014 alone 450 units went to São Paulo.

Market environment expected to be challenging again in 2015

Daimler Buses expects the market environment to be challenging again this year. After suffering a major contraction last year, the situation in the core market Brazil will remain challenging, In addition to a weak economy, demand in Brazil is affected by unfavorable government financing terms for buyers. Basically, sales in 2015 strongly depend on the further development in Latin America. At the same time Daimler Buses sees sales potential in growth markets such as Mexico and increasingly India. The earnings of Daimler Buses are expected to be somewhat lower this year than in 2014.

New facility in India to exploit growth potential

In India, Daimler Buses will reach an important milestone at the end of May , when the bus plant is completed in Chennai. The plant will have an installed capacity of 1,500 vehicles per year in its initial phase. However, the capacity can be expanded further to as high as 4,000 units. The division will invest the equivalent of about €50 million in production, sales, and service activities in India. The buses and chassis made in India will help strengthen Daimler Buses' global presence and let it exploit new growth markets.

The plant will manufacture Mercedes-Benz brand rear-engine buses for the premium segment. The product range will also encompass front-engine buses of the BharatBenz brand, which will be adapted to the specific needs of India's volume bus market. These models will be equipped with an especially designed body from the Irish manufacturer Wrightbus, whose production facility will be integrated into the plant.

BharatBenz brand buses are especially robust and will set a new benchmark for the Indian bus market. As a result, the buses are not only ideally suited for the local market, but also for export to other growth markets. Chassis have, in fact, already been delivered to Egypt, where they are used as the basis for minibuses. The products are scheduled to be sold in additional markets as well.

New mobility solutions as additional growth area for buses

As a globally active player, Daimler Buses can also exploit opportunities resulting from the good long-term prospects for the global bus business. Even a mature market such as Europe saw the number of trips with public transportation systems increase by more than 8% between 2000 and 2012. Well over half of these trips were made in buses. In addition, there is a strong urbanization trend in many growth markets. As a result, the demand for pioneering passenger transport solutions is now greater than ever before.

As a full-range vehicle supplier, Daimler Buses not only offers the right product lineup, but also comprehensive mobility solutions that open up additional growth opportunities. Rapid bus lines for the efficient transport of passengers in big cities -also called Bus Rapid Transit (BRT) systems - are becoming increasingly important.

The benefits of BRT are obvious, because such a system can be planned and implemented much more cheaply than transportation solutions that use rail vehicles, for example. In addition, BRT systems can be more easily adapted to changed requirements later on. BRT's potential is huge. It is already standard at many places in Latin America, and rapid bus lines are also becoming very popular in Europe, Southeast Asia, and the Middle East.

Daimler Buses has gained extensive expertise in this area over the past three decades. The division's 15 experts work together in teams to support the planning, introduction, and enhancement of rapid bus lines in more than 30 cities worldwide, including Strasbourg, Johannesburg, Rio de Janeiro, and Istanbul.

Huge potential for customized services

Daimler Buses sees huge growth potential in the services sector. More and more customers want all-in-one service packages that encompass everything from financing, maintenance, and repairs to driver training courses and telematics services. In addition, customers want to have a precise overview of each vehicle's total cost per kilometer.

One of the aspects here is depot management, which enables customers to conclude long-term maintenance and repair contracts in conjunction with a vehicle purchase. An example of this was the delivery of more than 200 Citaro buses to Vienna's public transport companies in 2014. The total package included a full-service agreement with a duration of eight years. The same holds true for a tender in Russia, whereas 100 Mercedes-Benz Conecto will be delivered to Moscow. Here too, deals on service and depot management played an important role.