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Interview: Why MAN Truck & Bus has international plans for its Dubai operation

Jörg Mommertz talks to T&FME about turning MAN Truck & Bus ME into a trading hub for the MENA region

The past ten years has seen MAN Truck & Bus build on its reputation of providing German-made heavy engineering-inspired vehicles to the Middle East. It started the decade drafting in team members that had consolidated its position in Southern Africa to its then newly founded Dubai office with the objective of getting closer to the booming construction market while it took on many of its long-standing European competition with its well-regarded fleet of heavy trucks.

Early this year, industry whispers suggested that MAN’s adventure in the region was drawing to a close and that it could be about to shutter its operation in the UAE. Last month T&FME learned this could not be further from truth.

The regional managing director of MAN Truck & Bus Middle East re-states the firm’s commitment to the Middle East and Africa region during an expansive interview with T&FME.

Unlike his predecessor Franz von Redwitz, Jörg Mommertz is based in Germany; leading some industry observers to speculate that MAN Truck & Bus could fold its operation in the Middle East.

Mommertz told T&FME that his role will see him travel extensively throughout the two continents to maintain close contact with the market and customers.

He added that changing market demand means MAN’s Dubai operation will function as a hub as it looks to expand its business across the Middle East and North Africa.

“Opposite to the rumours, MAN doesn’t have any intention to close business here in Dubai,” said Mommertz. “We want to reinforce our activities here to use Dubai as a hub for the Middle East and the northern part of Africa.”

He added that southern Africa will be serviced by its present operation in South Africa.

“There will be two hubs and we want to use Dubai even more: as a training and trade hub for the entire region,” he said.

Describing the Middle East market as bottoming out last year, he said it has now stabilised and believes there will be small but sustainable growth in the coming years. Conversely, he emphasised that MAN was interested in the African market as it could experience faster growth.

“I personally believe the biggest growth potential we have in the future are markets outside Europe, and Africa is one. Maybe not the Middle East, which has, let’s say, stabilised on the bottom line. I see a small but sustainable growth in the coming years in the Middle East. However, our biggest and highest growth potential we expect to see in Africa. Most of the European truck manufacturers are looking for new opportunities, and I believe Africa has one of the biggest growth potentials.”

The conversation naturally swerves into a deeper discussion on the African market. Chinese-led Asian manufacturers are securing a foothold there as sales tend to be dominated by smaller, lighter trucks and not the heavy construction models that MAN has been focussing on in the Middle East. Mommertz says that its marketing its own light to medium-duty offerings, the TGL and TGM, but in sectors and countries where local demand is not necessarily interested in the state-of-the-art, it is able to offer models produced by its sister company MAN Latin America.

“We have a strong cooperation with our sister company (MAN Latin America) offering the Volkswagen commercial vehicles product range, and even today we have a product workshop for the entire region, making our sales organisation, our family of importers aware of the products. This means we can offer the Latin American Products into the budget segment,” he explains.

Mommertz’ role requires him to be responsible for the African and Middle East markets and he will be working with the teams in its two hubs in South Africa (which takes care of Southern Africa) and the UAE (which is serving the Middle East and Northern Africa). It means racking up thousands of miles in the air and brings into focus why it is important for him not to be sitting in an office in either one of those bases.

Fortunately, he says that as a self-confessed truck man who once worked on the service side of the industry he enjoys talking directly with customers wherever they may be based. It shines through most when we briefly talk about a recent customer event in South Africa: “I love the country, I love the people. It has nice customers of course!” He laughs.

Returning to the pivoting underway in Dubai he says that the operation is going to be focussed on being a trading and training hub; making use of the facilities established there as well as the UAE’s world class trade links.

It will also provide access as an executive and customer management level hub where the company can co-ordinate its effort to process individual customer requirements and local feedback back to the engineering and development teams at its production centres in Europe and South America. He again emphasises that the company has recognised that it needs to strengthen its ties to the end-user and Dubai can play a crucial role beyond its historical position as a sales outpost.

“We want to be closer to the market and offer our customers in Africa and Middle East more adjusted, adapted and customised solutions taking care of the different market situations inside the continents. We want to be closer to the customer and follow our principle of ‘customer first’.

“Market demands and customer requirements are different in Europe and it is better to get feedback directly from the markets so can offer better customised solutions.”

In terms of customised trucks, MAN wants to fall-back on its own bodybuilder connections in the country to construct completed rigs for customers across the region.

“There are well-established body-builders here in Dubai. In the African markets, customers often require complete solutions and they want us an OEM and general contractor. We can provide an added value here by bringing the truck here, doing the body-building in the Middle East and then exporting to the market.”

Effectively this could see an MAN Latin America truck kitted out by a local UAE body-builder contractor which is wrapped in services, like fleet management, maintenance, and logistics services, which are being co-ordinated by teams in Europe or possibly, in the case of telematics, from inside the region.

“Exactly, so our Latin American product, for instance, becomes a premium economy solution,” he says, adding that the company is in the throes of finalising a partnership with a telematics provider as the MAN propriety solution doesn’t currently cover the area. “We will roll that out soon as the customer is expecting an OEM solution for telematics.”

It has also secure a local partner for financing, Mommertz explains: “Although I cannot yet disclose the name.”

He continues: “Dubai is interesting as a hub which has also got a lot of ‘local content’ and we have been able to partner with (fellow German firm) as we also 100% German-owned, we have been able to partner with a German credit finance company to provide export financing. We recently completed an order for 300 units to Nigeria and it’s working well. These were heavy duty 6×4 trucks, and will be assembled in Nigeria at our CKD facility. This is the package solution we are offering.”

He jokes: “300 is not your typical daily order. I would be happy with 300 in a month!”

While he is keen to emphasise the differences between the markets we discuss, including the necessary adaptions to the trucks themselves, he notes that some larger fleets in the region relate to MAN Truck & Bus in much the same way as their European counterparts.

“In the UAE there is the state of the art from Europe as you have very professional customers like Almarai or Emirates; and they are demanding like a European customer – and that means you have to offer the same business solutions – not only the hardware, the truck – you have to offer consultancy, telematics, logistic processes, fleet management; you pay a maintenance contract and all the elements around the hardware.”

“I’m a trucker and I tell it straight, the golden age of the Middle East will not come back. This is the reality, it’s not blaming anybody, but we are business people and we have to realistic. In 2018, from my point of view, we were on the bottom line.

He continues: “2019 has been better than the back-end of 2018. We have had a great performance from the local team. I don’t think they couldve squeezed out more trucks and buses. I expect in the Middle East to see the smallest, but sustainable growth of between 5% and 10% for the coming years. There will always be oil fields, infrastructure and the distribution segment will depend on local consumption and let’s see what the market is offering us. I think public transport also has great potential.”

Given his decades of experience, what advice does he have for local fleets dealing with this new reality?

I’m not meant to teach a customer but you know we are always talking about TCO but customers, even in Europe, don’t always understand how to calculate it. Calculating TCO is a very complicated business. I did once meet a bus operator who had a complete picture of the TCO of his fleet but it is rare. My best advice is to focus on the safety of drivers. A good driver is reducing your costs. You also need the right vehicle for your business. Traditionally customers in the Middle East have had to buy what the dealer had on the yard this is why we are offering customised trucks. You always need optimal configuration for your business.

Extra reading: Mommertz on e-mobility

Whether it is buses or the TGe truck, MAN is placing itself at the forefront of e-mobility. Mommertz has doubts whether the region can keep adapt the technology in the near-term, even if there is demand in the market.

“Of course, we are getting a lot of contacts, a lot of questions, and requests in the UAE. On the one hand, we are still running in the GCC in Euro 2, 3 and 4 and we want to jump to MaaS and full emobility… Of course we are talking to customers who want to be a fore-runner of new technologies and we can do something as a test case but there are limitations. We have had some products requirements for the World Cup that are completely out of reach.

“To give you an example, we are in the process of delivering city buses to a customer and they have got the strongest air conditioning unit available on the market. This AC is sucking 44kW per hour. So there is a still a discompetency (in terms of current battery technology capacity), but in urban public transport I can see the first business cases for e-mobility.”

Extra reading: What is MAN Latin America?

MAN Latin America mainly operates under the Volkswagen Caminhões e Ônibus (Portuguese for Volkswagen Trucks and Buses) brand and specialises in the needs of developing markets. It offers light-, medium-, and heavy-duty trucks for long-distance and distribution transport, construction sites, and special areas. City and intercity buses and coaches are also available. Some of the products are available with alternative fuels. The services are tailored to special customer needs. In 2015, Volkswagen Caminhões e Ônibus sold a total of 24,000 vehicles, 20,000 trucks, and 5,000 buses.

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Stephen Whitehttps://truckandfleetme.com/
Stephen White was formerly editor of Big Project ME.
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