Mercedes-Benz considers new investments in Brazil

RIO DE JANEIRO, BRAZIL – Pandemic, inflation, diesel price hike, economy in technical recession, and a shortage of semiconductors to manufacture trucks. The sum of the factors creates a somewhat challenging scenario for vehicle manufacturers installed in Brazil.

In light of this, Mercedes-Benz is considering future local investments, according to Mercedes-Benz Brasil president and CEO for Latin America Achim Puchert, in a conversation with journalists on Thursday, January 13.

In 2022, the company will complete a R$2.4 billion (US$434,000) investment plan begun in 2018. The largest part, R$1.4 billion, was allocated to the project and launch of the extra-heavy Actros. The remainder was distributed among product renewals, launches, and the installation of 4.0 assembly lines for trucks, buses, and engines – the latter to be inaugurated in 2022.

With the amount close to being finalized, Puchert points out that the company is looking forward to reaping the results and observing the maturation of recent investments in order to study its next steps. Globally, the organization is working to reduce investments until 2025 and “make intelligent use of the capital already invested.”

“The volume of investments the organization is capable of making is not unlimited, so each needs to make sense and be profitable. This does not mean that we will not make new investments, but it is too early to talk about it,” says the company’s local president.

FINE BALANCE BETWEEN MARKET SHARE AND PROFITABILITY

In fact, considering the time Puchert has been at the helm of Mercedes-Benz Brasil, it is not an exaggeration to say that it is too early to talk about new investments. The executive officially took office on January 1, 2022 and, despite having made a number of recent visits to Brazil, he is still in the process of applying for a visa to be able to move to the country.

At 42 years of age, a sports and travel fan – something he expects to do plenty of in Brazil – the German executive points out that his management’s main challenge is to find the balance between market share and profitability.

Last year, with the crisis in the supply of semiconductors that limited vehicle production, the company lost its leadership, maintained for 5 years in truck sales, but sustained its position in the bus market.

Roberto Leoncini, vice-president of sales and marketing for trucks and buses recalls that there is growth in other business fronts, such as the sale of the brand’s original parts and the offer of services, such as maintenance plans and the Fleetboard telemetry system, now present in 60% of trucks sold by the brand.

“More than in leadership, our focus is to keep Mercedes-Benz as top of mind in transportation for customers, in addition to expanding the services portfolio while the global industry recovers the semiconductor supply capacity,” Leoncini says.

IN SEARCH OF MORE EXPORTS

To achieve the balance between sales and profitability that Puchert seeks, the company has been working to reduce costs and increase efficiency in Brazil. The global head of Mercedes-Benz Trucks Karin Rådström assures that the effort has brought positive results. “We are not ready yet, but we have been making improvements,” she says.

However, she concedes that for the accounts to close, it is essential that the company expands its external sales volumes from Brazil.

“Exporting more is something that will guarantee not only a better exchange rate balance, but also volume for our plants in Brazil and robust production even when the local market is weaker,” the executive says.

In her opinion, the company will not make any sudden changes, but will focus on the development of these new customers for local production in the coming years. “There are many challenges in the Brazilian operation and we will continue to work very hard to overcome them,” she adds, with the clear goal of gaining efficiency locally to increase the international presence of Brazilian trucks.