Daimler Truck Suspends
As Russia invades Ukraine, Daimler truck components its business operations there. While the company expects its supply chain to remain relatively stable, the disruption has resulted in higher raw material and energy costs. Despite the disruption, the company still expects to achieve its financial targets for the year. The company’s profitability is likely to improve, despite the disruption in the supply chain. It’s not the only company affected by the situation.
The decision comes amid a broader shakeup at Mercedes-Benz. The automaker has announced that it is suspending business activities with a Russian truck maker. Daimler Truck had a joint venture with Kamaz that has produced about 35,000 trucks for the Russian market. In 2008, Daimler took a 10% stake in Kamaz, but later increased its stake to 15%. The company still owns 15 percent of Kamaz.
Russia is a key market for Daimler Truck. The Russian market represents about three percent of the company’s global sales. As a result, the company is cutting production and parts shipments to dealers in the country, as part of its response to the crisis. In addition to Daimler Truck, other German truck manufacturers have frozen their business operations in the country. Some of these manufacturers may also follow suit.
Daimler Truck Suspends Components in Russia
Increasing scrutiny on the environmental impact of heavy-duty trucks has led to innovative heat-treatment schemes for the creation of lightweight components. Intensive quenching is one such method that allows for extreme cooling rates and creates components with high power density. Forging companies can also make money by selling these lightweight components to the heavy-duty trucking industry. A new study published in the journal Advanced Materials suggests that this method could save up to 30 percent of the truck’s weight.
In its first financial year as a standalone company, Daimler Truck reported significant unit sales volume, revenue, and net profit. The company sold about 20 percent more trucks than in the prior year and expects to achieve double-digit returns on sales by the end of 2025. Trucks North America will make up around 12% of the company’s future profits. However, despite the positive sales figures, the company is facing challenges in the U.S. and Europe due to supply constraints.
With the high funding needs, the automaker has to cut costs to survive. This is not a good situation for the company, especially given its current state of financial health. However, Daimler Truck still expects a return on sales of seven to nine percent for the current fiscal year. As a result, it is taking a risk and suspends the components of its vehicles. The company plans to restart production next week. It builds the C-Class sedan and GLS SUVs.