Ernie Trautmann, Hino vice president provided a company update this week at Toyota South Africa’s head office in Johannesburg.
“Calvyn (Hamann, senior vice president of sales and marketing) gave an instruction 18 months ago that, should there be a Toyota container and a Hino trucks container that have to be unpacked and they’re the last containers of the day, the Hino container must be prioritized,” he said.
“That shows the understanding of the truck business. It changed the mindset of all the people in the parts distribution centre (PDC). Somewhere out there a truck needs a part. It might be standing. It might be coming in for a service. So we need to get it out as soon as possible. That is how you build a culture of a truck organisation,” he says.
“If we can get our suppliers to support Hino trucks, then we can build relationships with them, including with bodybuilders, for example.”
Hino’s vision is to be the number one truck brand by 2020. The company has 65 dealers, 45 of which are shared with Toyota. “It’s not about creating more dealers. We want 65 dealers of a high calibre that are sustainable and which will provide high levels of service to look after the customer base,” Trautmann explains.
Long in the tooth
A major concern for Hino trucks is its ageing sales force.
In Hino’s analysis, sales executives 50 years and older are accountable for 60 – 70% of its total sales. In 2017, the company will implement a learnership programme, providing theoretical and practical training to 15 people under the age of 25.
“All of them will have a driver’s licence after the 12 months and will understand the workings of a dealership and Hino products,” he says.
“It’s more important to retain customers than to get new ones. Many truck manufacturers are prioritizing customer experiences, which is good for the industry. We see ourselves as the leaders in the industry and are quite happy to set the benchmark,” he states.
A big issue remains driving down the total cost of ownership.
In this regard, Hino trucks will be providing an extended two-year parts warranty on parts bought and fitted in Hino workshops. Customers will also be able to purchase extended warranties, up to a maximum of three additional years.
“We will keep focusing on parts availability for the next year. We’ve put a lot of demos and automatic models into fleets and we’ve also put a number of Hino 700s into the fleets. We are starting to see the success of both, particularly with regards to semi-automatic vehicles.
The company is targeting in excess of R300 million worth of parts sales this year.
“Aftersales is the crux of the truck business. We are selling more parts, and we are focusing on 100% overhead absorptions in exclusive dealers from parts and service.”
Hino predicted a new truck market of 28 000 units for 2016, down from the 30 500 sold last year. “In April, after looking at the figures, we brought that prediction down to 25 000. It looks as if the market will end up between 26 000 and 26 500.”
The medium commercial vehicle (MCV) sector has taken the brunt of this year’s truck sales decline, down year-on-year by 18.5%. “It is not as bad as it looks on the surface because part of the decline is due to the drop in panel van sales which are included in the MCV category,” he says.
Panel van sales are down around 30% while freight carriers – the ‘real’ truck market – is only down around 12%.”
Hino has maintained a 27% share of the MCV market, which includes the Dyna and Hino 300. Its semi-automatic model has helped keep the manufacturer in the sales lead in the segment. While the company’s MCV target market share is currently 26.7%, it is optimistic about achieving 28% for the year.
The heavy commercial vehicle (HCV) market has shown virtually no decline this year, a result driven by affordability. “We are under pressure in this segment of the market,” he concedes (Hino has an 18% share) although its target is 22%. While it projects capturing around 20% of the market for the year, an ageing Hino 500 model and no alternative transmission are losing it some favour.
The extra-heavy commercial vehicle (EHCV) segment is stable, with Hino capturing around 3.8% of it. Every month a big transaction stimulates this segment (consider the recent Mercedes-Benz/Bakers Transport deal).
The only concern in the EHCV segment is the Africa business, which has declined quite rapidly. “We’ve seen some very big fleets experience a lot of idle time with the trucks that are part of those company’s African operations,” he says. Hino is projecting to end up with around 4% of the EHCV market by end 2016 having concluded a number of deals that Trautmann says will materialize later in the year.
Hino’s total truck market share in South Africa is currently 13.5%, although it desires to achieve 14%.
“We saw great growth up to about May in terms of the number of vehicles visiting our workshops. In June and July, we saw a decline, which was due to vehicle utilisation levels dropping,” he explains.
Hino is well on the way to launching a used trucks franchise next year.”
“Our biggest problem is getting stock, so we will be going heavily into buybacks, not just in terms of extra-heavies where they are highly successful, but also in 300s and 500s. We want trucks that have been well-maintained, with good warranty and service histories.”
The company says that, over the last twelve months, it has carefully considered its maintenance and service plans. “What we’ve found is that you can’t have a one-size-fits-all maintenance plan. Every customer has got to be able to uniquely design his or her own maintenance plan,” he states.
Hino will officially appoint a maintenance manager next month to handle maintenance and service plan issues.
Day and night
One of its dealerships will, very soon, offer 24-hour servicing.
“We have a large fleet customer that chooses Hino exclusively because he can bring his trucks to be serviced on a Sunday, which means he has no downtime,” he explains.
Trautmann says Hino dealers are also wanting to perform brake testing services, because they see the opportunities, especially with EHCVs. “Every dealer is looking at their facilities and considering how they can accommodate bigger trucks and their trailers, he says.
A number of sales options have been done in conjunction with Toyota Financial Services (TFS). “By the end of the year, we’ll have approval from Hino Motors Limited and from TFS worldwide. So we’ll look at launching Hino Financial Services officially,” he concludes.