1 00:00:02,480 --> 00:00:08,039 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. We're joined now by 2 00:00:08,280 --> 00:00:08,920 Speaker 1: Martin Dowm. 3 00:00:08,960 --> 00:00:13,119 Speaker 2: He is the CEO of Daimler Truck and Martin, let's talk, 4 00:00:13,160 --> 00:00:16,160 Speaker 2: of course about the revenue forecast, because you're reported earnings 5 00:00:16,280 --> 00:00:19,000 Speaker 2: earlier this month. Shares have been surging thanks to that 6 00:00:19,040 --> 00:00:22,240 Speaker 2: forecast for revenue to increase as much as sixty percent 7 00:00:22,640 --> 00:00:23,560 Speaker 2: during the final. 8 00:00:23,360 --> 00:00:26,720 Speaker 1: Five years of this decade. Now, you said on the call. 9 00:00:26,520 --> 00:00:28,960 Speaker 2: That was thanks in part to a sales boost from 10 00:00:29,040 --> 00:00:32,840 Speaker 2: zero mission trucks and buses. What gives you the confidence 11 00:00:32,880 --> 00:00:36,600 Speaker 2: that the transition to electric vehicles will prop up margins? 12 00:00:38,120 --> 00:00:41,040 Speaker 3: I mean, first of all, it pops up revenues because 13 00:00:41,159 --> 00:00:45,000 Speaker 3: one thing I was always clear from years ago already 14 00:00:45,120 --> 00:00:51,280 Speaker 3: is that electrical SETIV vehicles will be always more expensive 15 00:00:51,840 --> 00:00:57,280 Speaker 3: than combustion engine vehicles. Combustion engines is the most efficient 16 00:00:57,320 --> 00:01:00,680 Speaker 3: way to rancet goods from A to B. They emit 17 00:01:01,000 --> 00:01:03,080 Speaker 3: CO two and if you want to get rid of 18 00:01:03,080 --> 00:01:06,880 Speaker 3: the CO two, it gets more expensive. Well, Martin, easy equation. 19 00:01:07,319 --> 00:01:09,080 Speaker 2: At the same time, I mean, you take a look 20 00:01:09,080 --> 00:01:12,120 Speaker 2: at the Europe rather you take a look at the US, 21 00:01:12,160 --> 00:01:16,280 Speaker 2: and you're really seeing ev demand for passenger vehicles. 22 00:01:15,800 --> 00:01:16,720 Speaker 1: Fall off a cliff. 23 00:01:16,720 --> 00:01:19,680 Speaker 2: You've had to see a lot of automakers really scale 24 00:01:19,720 --> 00:01:22,959 Speaker 2: back their production plans. And we're talking about commercial vehicles, 25 00:01:22,959 --> 00:01:26,080 Speaker 2: of course, different cattle of fish. But do those struggles 26 00:01:26,080 --> 00:01:28,120 Speaker 2: give you any concerns about these plans? 27 00:01:29,400 --> 00:01:35,679 Speaker 3: No, because it's I like you expressing different kettle of fish. 28 00:01:36,360 --> 00:01:41,600 Speaker 3: It's interesting. No, you buy a truck to move goods, 29 00:01:41,640 --> 00:01:45,000 Speaker 3: You buy a truck to earn money with it. You 30 00:01:45,120 --> 00:01:47,760 Speaker 3: never buy a truck out of fun, and you never 31 00:01:47,800 --> 00:01:51,800 Speaker 3: buy a truck to impress your neighbor. And therefore it's 32 00:01:51,800 --> 00:01:55,400 Speaker 3: a pretty easy equation. If it's more efficient to move 33 00:01:55,520 --> 00:01:57,680 Speaker 3: goods from A to B, if it's an electric talk, 34 00:01:57,880 --> 00:02:01,280 Speaker 3: then everyone buys one. If it's not, nobody would buy one, 35 00:02:01,400 --> 00:02:03,880 Speaker 3: and everything else is then so the price of CO 36 00:02:04,200 --> 00:02:08,600 Speaker 3: two is very important, and any type of regulation by 37 00:02:08,680 --> 00:02:11,520 Speaker 3: the regulators kettle fish. 38 00:02:11,560 --> 00:02:13,320 Speaker 1: I'll have to thank my mother for that term. She 39 00:02:13,400 --> 00:02:14,480 Speaker 1: uses it all the time. 40 00:02:14,520 --> 00:02:18,000 Speaker 2: But let's also talk about your margin projections as well. 41 00:02:18,240 --> 00:02:20,560 Speaker 2: Projecting a margin of as high as ten and a 42 00:02:20,600 --> 00:02:24,320 Speaker 2: half percent, that's even as you see unit sales declining. 43 00:02:24,360 --> 00:02:26,040 Speaker 1: Can you walk us through that math? 44 00:02:26,120 --> 00:02:29,040 Speaker 2: Of course, margins healthy sales declining does that come down 45 00:02:29,440 --> 00:02:31,799 Speaker 2: to higher costs on your part. 46 00:02:33,200 --> 00:02:36,440 Speaker 3: No, First of all, we are in a cyclical business, 47 00:02:36,639 --> 00:02:39,280 Speaker 3: and we had record years in twenty twenty two and 48 00:02:39,320 --> 00:02:39,920 Speaker 3: twenty three. 49 00:02:40,360 --> 00:02:43,080 Speaker 4: And now I use the term normalizing. It's not a 50 00:02:43,120 --> 00:02:44,600 Speaker 4: bad year twenty twenty four. 51 00:02:44,960 --> 00:02:48,880 Speaker 3: It's just the normal average amount of truck Any society 52 00:02:48,919 --> 00:02:51,919 Speaker 3: needs to keep it going. Anything you sell more in 53 00:02:52,040 --> 00:02:54,240 Speaker 3: one year, you will sell less in another year. So 54 00:02:54,440 --> 00:02:58,040 Speaker 3: normal year is basically good. This is what the trucking 55 00:02:58,200 --> 00:03:01,520 Speaker 3: ISR is like. However, our news stays the same, and 56 00:03:01,600 --> 00:03:04,760 Speaker 3: that comes a certainly through pricing. 57 00:03:07,040 --> 00:03:08,480 Speaker 4: Spill over effacts. 58 00:03:08,040 --> 00:03:12,040 Speaker 3: From the previous years, but more importantly it comes from 59 00:03:12,560 --> 00:03:17,240 Speaker 3: extended service business which were parallel expanded in the last 60 00:03:17,320 --> 00:03:21,200 Speaker 3: years and which is a huge source for significantly increased 61 00:03:21,240 --> 00:03:22,919 Speaker 3: profits in the last couple of years. 62 00:03:23,200 --> 00:03:24,720 Speaker 1: All right, So a normalization there. 63 00:03:24,800 --> 00:03:26,520 Speaker 2: I am curious for a little bit of color when 64 00:03:26,520 --> 00:03:28,919 Speaker 2: it comes to input costs. When you're taking a look 65 00:03:28,919 --> 00:03:31,960 Speaker 2: at raw materials right now, how do those costs compare 66 00:03:32,040 --> 00:03:34,079 Speaker 2: to what we've been seeing over the past couple of years. 67 00:03:35,040 --> 00:03:38,560 Speaker 3: I mean, the raw matale markets don't go as much 68 00:03:38,680 --> 00:03:40,800 Speaker 3: up as we've seen it in the past, but it's 69 00:03:40,800 --> 00:03:46,600 Speaker 3: a huge mix of bagfast. Especially important is aluminum and steal. 70 00:03:46,800 --> 00:03:49,840 Speaker 3: Everything else is basically a wash. But on top of 71 00:03:49,880 --> 00:03:52,360 Speaker 3: the raw material, what's far more important at the moment 72 00:03:52,960 --> 00:03:56,360 Speaker 3: is inflationary tendencies we see in a lot of the 73 00:03:56,400 --> 00:04:00,600 Speaker 3: material we purchased from suppliers. So it's always the same discussion. Yes, 74 00:04:00,720 --> 00:04:04,200 Speaker 3: war matill it's a slight easing, but on the other side, 75 00:04:04,760 --> 00:04:07,640 Speaker 3: they are inflationary costs on their side. On the HS, 76 00:04:07,720 --> 00:04:10,800 Speaker 3: especially in the US, when I think of UW new 77 00:04:10,880 --> 00:04:15,960 Speaker 3: contracts and that ultimately puts continues to put pressure on 78 00:04:16,040 --> 00:04:18,880 Speaker 3: our matial, which on the other side puts pressure on 79 00:04:18,960 --> 00:04:22,360 Speaker 3: our pricing to our customers. And war Matial is here 80 00:04:22,480 --> 00:04:24,039 Speaker 3: not the decisive think. 81 00:04:24,400 --> 00:04:26,320 Speaker 2: So a lot of different inputs there. Of course, when 82 00:04:26,320 --> 00:04:28,760 Speaker 2: it comes to raw materials. I do want to get 83 00:04:28,760 --> 00:04:32,279 Speaker 2: some perspective on the competitive landscape because you have Tesla's 84 00:04:32,279 --> 00:04:35,240 Speaker 2: CEO Elon Musk. He recently said that Tesla is considering 85 00:04:35,240 --> 00:04:39,000 Speaker 2: building its electric semi truck in its German plan, of course, 86 00:04:39,040 --> 00:04:40,240 Speaker 2: that is near Berlin. 87 00:04:40,800 --> 00:04:43,240 Speaker 1: How do you view the competitive landscape? 88 00:04:43,279 --> 00:04:45,600 Speaker 2: Of course, Tesla it's aiming at producing a truck at 89 00:04:45,680 --> 00:04:48,200 Speaker 2: roughly the same price as a diesel engine. 90 00:04:48,680 --> 00:04:50,680 Speaker 1: Truck on your end, So how are you viewing that. 91 00:04:51,839 --> 00:04:54,719 Speaker 4: I would say that, first of all, two things. 92 00:04:55,800 --> 00:04:58,960 Speaker 3: Wrong in that statement, and I respect Elan Musk, But 93 00:04:59,360 --> 00:05:01,760 Speaker 3: number one, the truck he presented to the markets in 94 00:05:01,800 --> 00:05:04,720 Speaker 3: the United States. Unfortunately it's too long for Europe, so 95 00:05:04,760 --> 00:05:07,320 Speaker 3: he needs to redesign that truck, and I haven't seen 96 00:05:07,360 --> 00:05:10,360 Speaker 3: any design from Europe. Secondly, to sell a truck at 97 00:05:10,360 --> 00:05:12,960 Speaker 3: the same price as a diesel truck, in my opinions, 98 00:05:13,000 --> 00:05:17,799 Speaker 3: even for Tesla a little bit a push, I haven't 99 00:05:17,800 --> 00:05:20,400 Speaker 3: seen that in their pricing in the United States. He 100 00:05:21,000 --> 00:05:24,160 Speaker 3: wants to sell in the United States since years, tons 101 00:05:24,200 --> 00:05:27,080 Speaker 3: of electric trucks and he hasn't done it. In fact, 102 00:05:27,200 --> 00:05:30,520 Speaker 3: we outsold him, I would say, in fact, to fifteen 103 00:05:30,600 --> 00:05:36,359 Speaker 3: to one in California in twenty twenty three. So I 104 00:05:36,480 --> 00:05:40,840 Speaker 3: welcome competition and I'm looking forward to see him in Europe. 105 00:05:40,920 --> 00:05:44,000 Speaker 2: Well, I appreciate those clarifications, Martin, and I mean, putting 106 00:05:44,040 --> 00:05:46,720 Speaker 2: it all together, it sounds like you're pretty confident in 107 00:05:46,760 --> 00:05:48,440 Speaker 2: your position here on the global scale. 108 00:05:49,560 --> 00:05:53,840 Speaker 3: Yes, I mean, look, we built five hundred, twenty five 109 00:05:53,920 --> 00:05:56,440 Speaker 3: hundred and thirty thousand trucks and we are growing. I 110 00:05:56,440 --> 00:06:00,080 Speaker 3: think no problem pass to build five hundred fifty I 111 00:06:00,120 --> 00:06:01,120 Speaker 3: found sixty thousand. 112 00:06:01,440 --> 00:06:03,600 Speaker 4: That gives us a certain amount of scale. 113 00:06:04,000 --> 00:06:07,960 Speaker 3: And the trucking industry is a highly diverse industry. You 114 00:06:08,240 --> 00:06:11,120 Speaker 3: can't win the war it's just one truck. You need 115 00:06:11,720 --> 00:06:15,040 Speaker 3: hundreds of different types of trucks, all coming out of 116 00:06:15,080 --> 00:06:17,839 Speaker 3: the same tool set. And that is what the big 117 00:06:17,839 --> 00:06:21,440 Speaker 3: players in the market, and you have them initially on your. 118 00:06:21,360 --> 00:06:23,800 Speaker 4: Chart with Volvo and trot and Taka and us. 119 00:06:24,400 --> 00:06:26,279 Speaker 3: That is what we all can do out of the 120 00:06:26,320 --> 00:06:30,479 Speaker 3: same tool set, build out hundreds of different variants of trucks. 121 00:06:30,200 --> 00:06:32,080 Speaker 4: And that is very difficult to repplicate. 122 00:06:32,279 --> 00:06:34,919 Speaker 3: And then comes a question of service network, which you 123 00:06:35,000 --> 00:06:37,560 Speaker 3: then need coast to coast in the US, through all 124 00:06:37,600 --> 00:06:38,599 Speaker 3: countries in Europe. 125 00:06:38,800 --> 00:06:40,120 Speaker 4: That's a high hurdle as well. 126 00:06:40,520 --> 00:06:43,760 Speaker 3: So I never would say this is impossible, but it's 127 00:06:43,839 --> 00:06:46,040 Speaker 3: a very very huge undertaking. 128 00:06:46,400 --> 00:06:49,360 Speaker 2: Well, Martin, when you look across the competitive landscape, of course, 129 00:06:49,400 --> 00:06:51,680 Speaker 2: with those factors that you mentioned, would you expect to 130 00:06:51,720 --> 00:06:55,119 Speaker 2: see any consolidation any m and A when it comes 131 00:06:55,160 --> 00:06:58,320 Speaker 2: to the trucking industry, perhaps led of course by Dimler. 132 00:07:00,040 --> 00:07:03,960 Speaker 3: Definitely we are consolidated, I would say in our industry enough. 133 00:07:04,000 --> 00:07:07,279 Speaker 3: We have four global players who are in all big 134 00:07:07,320 --> 00:07:10,360 Speaker 3: fields of the world. We are s time that we 135 00:07:10,360 --> 00:07:12,560 Speaker 3: are in every country of the world where you are 136 00:07:12,600 --> 00:07:15,280 Speaker 3: allowed to do business. We are even in Antarctica with 137 00:07:15,520 --> 00:07:21,080 Speaker 3: a couple of expedition trucks. And therefore we have we 138 00:07:21,440 --> 00:07:24,440 Speaker 3: covered the world. We cover every single segment. I would 139 00:07:24,440 --> 00:07:27,320 Speaker 3: say if we go, we go out of our own strengths. 140 00:07:27,520 --> 00:07:31,400 Speaker 2: All right, Martin really enjoyed this conversation. I really appreciate 141 00:07:31,440 --> 00:07:33,800 Speaker 2: your time. Of course, on this Monday, our thanks of 142 00:07:33,840 --> 00:07:36,280 Speaker 2: course to Martin Down of Diaimler Trucks.