For all the gloominess around car maker Daimler, which on Feb 6 revealed a 28% downturn in 2018 profits and slashed its dividend, the story that never made the headlines was how well Daimler’s trucking division is doing.
We already posted the big numbers here, but behind the hard-charging global Daimler truck story sits another story, the astonishing out-performance of the USA.
Yes, you say, but look at those emerging markets. Indonesia up by over 50% in one year; Brazil up by a similar margin. But these tigers are leaping from low levels, Brazil up from 13,400 units to 21,400 units.
The USA leapt from 140,200 units to 160,600 units, a hair’s breadth short of adding an entire Brazil to the inventory in just one year.
That, in case you hadn’t noticed it folks, is a serious freight boom.
In its wake is a trucking boom, led in Daimler’s case by subsidiary and market leader Freightliner, and Western Star, the latter positioned as a premium truck brand.
As with all heady booms, there is a certain nervousness among haulers.
First, they can’t find the drivers except by hiking pay, which has led to crazy headline pay packets of as much as $140,000 for some drivers.
Secondly, no one knows what the tariff war with China will mean, as soon as March. The worry is that it punches a hole in Chinese imports to the US. That could either take the heat out of the boom or worse, which is one reason why Daimler is predicting a flat year for truck sales in the US.
Aside from the short-term unknowns are the long-term ones, except that Daimler has made clear where they are headed.
The number one destination is autonomous driving. The existing global boss of Daimler global, Dieter Zetsche, steps down in May, but has already announced cost cuts to pay for new technologies. The incoming head, the first non-German to ever lead the company, is digital maestro Ola Kallenius.
Check out Kallenius’ CV and the first you see is Tuscaloosa, where he began his career at Daimler, returning there as Vice President, President & CEO, Mercedes-Benz U.S. International Inc., as recently as 2009. In other words, he’s very familiar with the US market and will quickly appreciate the trucking operation.
Furthermore, a spokesman for Daimler Trucks spoke to us highly of the US as the number one place for testing autonomous tech, mentioning Nevada, one of the more permissive states.
This makes sense because with a serious driver shortage, the strongest business case for removing the driver, from an operator logistics perspective, is in the US.
This is why Daimler is leap-frogging Level 2 autonomy to Level 4, the point at which an invisible but massive threshold is crossed, the liability for the vehicle’s performance and safety switching from the driver to the manufacturer.
Level 4 is not quite the point at which the driver is absent from the cab. That’s Level 5 and it’s a few years away. But Level 4 will allow a driver to take their eyes off the road and focus on more productive work, no doubt on a touchpad of some sort, maybe carrying Daimler’s latest app Hubbl.
It’s a revolution that’s close on the horizon and it looks as though the US will lead it.
For all the media noise coming out of Tesla, the race is wide open.
If Freightliner get there first via Daimler tech, it will be a sweet irony amid all the make-America-Great-Again hoopla.