Truck&Fleet ME April 2020 by CPI Trade Media

VEHICLES/ TECH / TRANSPORTATION/LOGISTICS

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LAUNCHES

CONTENTS FEATURE

16 / E-VOLVO-LUTION IN HEAVY DUTY Volvo Trucks unleashes its new generation of heavy trucks.

ALSO THIS ISSUE … NETWORK

06 / NEWS FROM THE MONTH

News from around the region as Bee’ah scores major deal at Dubai Airport. LAUNCHES

12 / GENESIS G80 Genesis unveils its new G80 and announces prices for the upcoming GV80. FEATURE

14 / COVID-19 STRIKES T&FME scans the month’s announcements as European truck manufacturing closes up. FEATURE

18 / RENAULT ROLLS ON Renault Trucks boss Bruno Blin talks about its new electric line-up and dealing with COVID-19. FEATURE

22 / THE REGION IS RISING Agility publishes its new emerging makets survey with the Middle East markets rising. EVENTS

34 / THE SHOW WILL GO ON The organisers of Automechanika Dubai says the aftermarket event will go ahead later this year. FEATURE

36 / PLANT AND PROGRESS A look at the impact of the Coronavirus in China as factories plot tentative re-starts.

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APRIL 2020

NETWORK

GROUP MANAGING DIRECTOR RAZ ISLAM raz.islam@cpitrademedia.com +971 4 375 5483 MANAGING PARTNER VIJAYA CHERIAN vijaya.cherian@cpitrademedia.com +971 4 375 5472 EDITORIAL

A TIME TO BE BOLD SO YOUCAN COME OUT SWINGING This was a month where I spent more time on the phone and less time on the road. I even logged into a couple of hastily organised conferences that had been forced to go online. I was supposed to be on flights across the region and instead I was playing desk jockey. The Coronavirus outbreak may have grounded me but T&FME is going to work harder than ever to cover the industry. I remember writing an Editor’s letter just prior to the global economic downturn over a decade ago, where in my naiviety, I told the industry not to talk themselves into a recession. Unfortunately, events overtook my words and within months we were all having to re-adjust to a much more troubling reality. I learned a lesson then, but, more importantly, what I learned afterwards was to prove much more helpful. In response, it was my job to seek out the market and get closer to them than ever before. By that, I don’t mean visiting every business in the sector but checking in with people; finding out what they were doing to find new contracts and new deals. I also wanted

to find out what was making some people thrive and others struggle. What I learned was that good businesses will ride out challenges like the Coronavirus and economic uncertainty, and excel if they aim higher. Sometimes it is impossible to envision that level is reachable but, if you believe that, then you might as well self-isolate for the rest of the year. I have learned that an economic jolt – and hopefully this is just a shortterm one – is an opportunity to get ready for the inevitable bounce-back. Poorly run companies can carry on even in the harshest of climates, but it is only the best ones that can hit the ground running when the market stops holding its breath. Fortunately, the region’s governments, such as the UAE, have reacted quickly, and we can be optimistic that businesses will only suffer mild symptoms. So, let’s take a deep look at how we are currently operating and make sure that we have the best systems and people in place – trust me, it will help you more in the long-run. And my final piece of advice – and this was given to me at that difficult time a decade ago – is to be bold. Even as others go hiding.

EDITOR STEPHEN WHITE stephen.white@cpitrademedia.com +44 7541 244 377 SUB EDITOR AELRED DOYLE aelred.doyle@cpitrademedia.com ADVERTISING SENIOR SALES MANAGER BIPIN SONEJI bipin.soneji@cpitrademedia.com +971 4 433 2856 DESIGN ART DIRECTOR SIMON COBON simon.cobon@cpitrademedia.com DESIGNER PERCIVAL MANALAYSAY percival.manalaysay@cpitrademedia.com PHOTOGRAPHY MAKSYM PORIECHKIN maksym.poriechkin@cpitrademedia.com MARKETING MARKETING ASSISTANT AYSHA SULTAN aysha.sultan@cpitrademedia.com +971 4 375 5498 CIRCULATION & PRODUCTION PRODUCTION MANAGER VIPIN V. VIJAY vipin.vijay@cpitrademedia.com +971 4 375 5713 DISTRIBUTION MANAGER PHINSON MATHEW GEORGE phinson.george@cpitrademedia.com +971 4 375 5476 WEB DEVELOPMENT SADIQ SIDDIQUI ABDUL BAEIS FINANCE ACCOUNTS SHIYAS KAREEM shiyas.kareem@cpitrademedia.com +971 4 375 5474 CREDIT CONTROL EXECUTIVE CAMERON CARDOZO cameron.cardozo@cpitrademedia.com +971 4 375 5499 FOUNDER DOMINIC DE SOUSA (1959-2015)

The publisher of this magazine has made every effort to ensure the content is accurate on the date of publication. The opinions and views expressed in the articles do not necessarily reflect the publisher and editor. The published material, adverts, editorials and all other content are published in good faith. No part of this publication or any part of the contents thereof may be reproduced, stored or transmitted in any form without the permission of the publisher in writing. Publication licensed by Dubai Development Authority

STEPHEN WHITE EDITOR, TRUCK&FLEET ME STEPHEN.WHITE@CPITRADEMEDIA.COM 02 APRIL 2020

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CONSTRUCTION

CORONAVIRUS: UAE PROPERTY MARKET TO RECEIVE SHOT-IN-THEARM DUE TO $27BN STIMULUS PACKAGE, SAVILLS MIDDLE EAST SAYS

SCCI and Etihad Rail call on relevant business sectors to participate in rail project

CONSULTANT

Coronavirus: Dubai Investments announces initiatives to combat COVID-19

Interview: Ducab CEO on new copper, aluminium metal subsidiary DMB (Exclusive)

CONSTRUCTION

Oman launches pilot project for Smart Cities at Knowledge Oasis Muscat

CONSULTANT

Egypt proposes alternate e-waste disposable solutions

MACHINERY

Cummins becomes sole engine supplier for Hyundai CE’s heavy range

04 APRIL 2020

READERS’ COMMENTS

It is no surprise that we are finally beginning to see the market start to react to the spread of the virus (Coronavirus: UAE property market to receive shot-in-the-arm due to $27bn stimulus package, Savills Middle East says). I have been relieved to see projects I am involved in take measures to protect our workforce and I am glad to see that our peers are also now taking the necessary steps. It is important that all the way down the chain of construction that we now support one another to ensure that we can retain some normality in this extraordinary time. However, I do worry that this is the beginning of a longer malaise as we deal with this threat plus the ongoing problems in the global economy. It is now imperative that we continue to reach for the highest standards possible and work collectively to ensure we come out in a stronger position once this period is over.

Feature: Site Visit – Building The Pangolin

Name withheld by request

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NETWORK

BEE’AH WINS MAJOR DXB CONTRACT / ETIHAD RAIL OPENS INDUSTRY DOOR ENOC UNVEILS SERVICE STATION OF THE FUTURE / NISSAN AND AA TARGET FLEETS

NETWORK

Dubai Airports opts for Bee’ah for waste management services BEE’AH TO MANAGE AIRPORT WASTE OPERATIONS, INCLUDING NON-HAZARDOUS AND HAZARDOUS, USED COOKING AND USED ENGINE OIL WASTE AND ALL RECYCLABLES FLEET UAE-based sustainability services pioneer, Bee’ah has announced that it has been appointed the waste management partner for Dubai International (DXB) and Dubai World Central (DWC) airports, both of which are operated and developed by Dubai Airports. Under the terms of the agreement, Bee’ah will manage both airside and landside

waste management operations, including non-hazardous waste, hazardous waste, used cooking and used engine oil waste and all recyclables. In addition to that, it will also work in conjunction with Dubai Airports’ facilities care team to handle and dispose of all waste from excess baggage and confiscated materials. HE Khaled Al Huraimel, group CEO at Bee’ah, said: “Bee’ah has repeatedly proven

to be among the Middle East’s leading environmental services provider, through the focus on creating a sustainable quality of life in the region.” “We are immensely proud to be the new waste management partner of one of the world’s busiest transportation hubs, and to support them with their sustainability mandate of reducing waste to landfills and implementing advanced recycling

and material recovery,” he added. Dubai Airports has banned all single-use plastics including plastic cutlery, drinking straws and food packaging across its terminals in cooperation with its concessionaires and service partners. In response to the partnership, Jose Oller, EVP of Service & Operations at Dubai Airports said: “Most of the single-use plastics at our airport have been replaced.”

BEE’AH HAS ACHIEVED A 76% WASTE DIVERSION RATE IN SHARJAH – THE HIGHEST IN THE REGION – AND IS PROJECTED TO REACH 100% IN 2021

06 APRIL 2020

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NETWORK

ENOC ‘SERVICE STATION OF THE FUTURE’ AT EXPO SITE TAKES SHAPE

INDUSTRY INVITED INTO ETIHAD RAIL TALKS LOGISTICS

The Sharjah Chamber of Commerce and Industry (SCCI) recently met with a delegation from Etihad Rail to discuss avenues of cooperation and to introduce Sharjah’s business community to the importance of the rail project, mainly in terms of supporting the national economy. According to a statement released by SCCI, the meeting also reviewed the possibility of holding an introductory seminar for government and private sector representatives in Sharjah, to acquaint them with the importance of the project and to motivate the relevant sectors to participate in the implementation stages, as per the project plan. The Etihad Rail delegation included Mohammed Al-Marzouqi, Director of Partner Relations Department, and Khalid Faisal Al Shehhi, Head of Partner Relations Department, and was received by Ibrahim Rashid Al Jarwan, Director of SCCI’s Economic Relations and Marketing, Jamal Bu Zinjal, Head of Media Department, SCCI, and Saif Al Matroushi, Director, Membership Affairs Department, SCCI. The visiting delegation provided an overview of Etihad Rail’s vision in terms of providing safe and sustainable rail networks and offering train transport services for passengers and goods in the UAE, in accordance with the highest standards of safety and sustainability through innovation and constant development of technology and its apps. Al Jarwan emphasised the importance of the transport sector and its role in supporting the national economy and connecting the UAE cities and ports. He highlighted the importance of the “Etihad Rail Project” which is one of most important economic and development projects that will raise the performance of the transport sector in the UAE and GCC, expressing the SCCI’s keenness to organise, in coordination with the Etihad Rail, a seminar to introduce the business community to the objectives of the project and the opportunities available to participate in the stages of its implementation.

FUELLING The UAE-based ENOC Group has announced that the construction of its Ghaf-tree inspired ‘Service Station of the Future’, located at the Expo 2020 Dubai site, has reached the 40% completion mark. Work on the region’s first LEED Gold certified service station began in August 2019, and it is expected to be completed by June 2020. Once Expo 2020 is over, the service station will be open to the public, as part of the site’s legacy phase, a statement from the company said. During the first phase of testing, the station will service approximately 500 official Expo 2020 Dubai vehicles that cater to VIP officials and Operational vehicles. It will be equipped with six pumps to serve up to 80,000 litres of fuel, which can supply up to 2,000 vehicles daily. Saif Humaid Al Falasi, Group CEO, Enoc, said: “The ‘Service Station of the Future’ embodies our commitment to “Reimagine Energy” by creating a prototype of the future of retail service stations. In addition to serving as a testament to our drive to innovate and set new standards for the industry, this station will contribute to Expo 2020 Dubai plans to leave behind a powerful legacy for Dubai and the UAE.” The station uses smart, energyefficient and renewable solutions, including having a wind turbine generating power, and photovoltaic solar panels. It is estimated that the service station

will be able to achieve overall power savings of 48%, which is equivalent to 228MWh per year. The clean energy initiatives will also help reduce approximately 100,000 kg of carbon dioxide emissions, equivalent to the benefit of planting 114 trees annually. The clean energy initiatives will also help reduce approximately 100,000 kg of carbon dioxide emissions, equivalent to the benefit of planting 114 trees annually. High efficiency LED fixtures will be used to save up to 30% energy compared to regular LED and 60% as compared to conventional lighting. A navigation lighting system with motion and occupancy sensors will allow up to 15%t savings in energy, the statement said. Additional energy conservation measures include the use of lowflow water fixtures targeting at least 40%reduction from baseline water consumption, it added. In addition, the wind turbines with a capacity of 5 kWp output will convert renewable wind energy to electrical energy with on-grid net metering facility. The service station also comes with chargers for electric vehicles. The service station’s canopy is made from carbon fibre and is three times stronger and five times lighter than steel. The Ethylene tetrafluoroethylene (ETFE) - commonly known as polymer cushion allows natural light to enter and provides 100% UV ray protection.

APRIL 2020 07

NETWORK

NISSAN AND AA CAMPAIGN TARGETS FLEETS

FLEET

The Nissan division of Arabian Automobiles in the UAE is targeting fleets with the launch of a new campaign for their Micra, Sunny, Sentra, Altima, Kicks, X-TRAIL, Patrol, Navara, and Urvan vehicles.

The firm says Business+Offer is a response to the requirements of a diverse range of businesses and features a range of offers intended to help fleets in Dubai, Sharjah, and the Northern Emirates “expand their business and grow

widely across the region”. “Nissan of Arabian Automobiles is proud to have loyal customers in the UAE who support our business and consider Nissan vehicles to be part of their fleet. Nissan is synonymous with the growth and advancement of the UAE and actively plays a role in supporting many communities and stakeholders across a multitude of sectors,” said a statement declaring the offer from Arabian Automobiles. “This tactical campaign will pave the way for many more customer and business-centric offers and benefits for the coming year and beyond.”

SRTA COMPLETES $1.2M ROAD IMPROVEMENT PROJECT FOR AL DHAID CITY ROAD NETWORK Sharjah Roads and Transport Authority (SRTA) has announced the completion of a $1.2 million improvement project for Al Dhaid City Roads, which will help ensure the safety of road users in the Northern Emirate. The project is part of the SRTA’s annual plan to develop roads and boost infrastructure in various places across the emirate, Yousef Saleh Al Suwaji, chairman of the

authority, said in a statement. He pointed out that cities in the central region are currently witnessing urban, cultural and tourism development. He added that the SRTA attaches great importance to road development projects in the region, with the aim of providing the best services and projects for citizens and residents. “This contributes to upgrading the emirate’s competitive

position, in accordance with the highest levels and enhancing the attractiveness of investments and development,” he concluded. In 2019, WAM reported that the SRTA had completed $7.62 million worth of work on road networks, aimed at strengthening the economic and social mobility of the emirate in areas like Al Batayeh, Al Dhaid, Al Madam and Mleiha.as well as the central region of Sharjah.

ALMAJDOUI TO HANDLE GROUPE PSA IN KSA DISTRIBUTORS

Groupe PSA, the French automotive manufacturer of Peugeot, Citroen, DS and Opel brands has announced AlMajdouie as the new Peugeot dealer in Saudi Arabia. The announcement was made at a press conference following the inauguration of the Peugeot Khobar showroom in the presence of regional media and distinguished guests. The first AlMajdouie-Peugeot Showroom, located on King Fahad Road, Al Bustan District in Khobar, spans 2,200 square metres in total, and with the capacity to display nine cars on the showroom floor. With the Khobar showroom up and running, AlMajdouie plans to expand Peugeot’s presence in the Kingdom by opening two more showrooms in Riyadh and Jeddah by June 2020. Medium-term plans for the brand include opening showrooms and service centres in eight cities across KSA by 2024. “We are confident in AlMajdouie’s knowledge and established reputation in the Saudi market,” said Samir Cherfan, EVP, MEA Region, Groupe PSA. “Their network of 13 dealerships and 40 service centres is a testament to their ability to maintain customers and offer top-notch aftersales services that match Peugeot’s own high-end offering.” Rakesh Nair, managing director, Groupe PSA , GCC, added: “Following a record year for the brand across the GCC, with a 72% increase in sales, now is the perfect time for Peugeot to reestablish its presence in the Kingdom.”

INSIDE THIS ISSUE: GAIN INSIGHT INTO HOW THE CORONAVIRUS IS IMPACTING THE AUTOMOTIVE INDUSTRY AND MUCH MORE!

08 APRIL 2020

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NETWORK

AL TAYER MOTORS EARNS MULTIPLE ISO CERTS DEALERS

ACCIONA DELIVERS REGION’S FIRST 3D PRINTED CONCRETE BUS STOP PUBLIC TRANSPORT

A concrete 3D printed bus stop, said to be the first of its kind in the Middle East, has been installed in Ajman by global sustainable infrastructure solutions provider, Acciona. A statement from the Spanish company said the bus stop, which weighs almost 3t and is 4.5m long, 2m wide and 2.3m high, consists of three printed pieces and took less than 10 hours to be printed. The project was executed for the Transport Authority of the Government of Ajman and was presented at a ceremony held recently, which was attended by His Highness Sheikh Humaid bin Rashid Al Nuaimi, Ruler of Ajman and UAE Supreme Council Member, along with other high officials of the emirate, along with senior members of Acciona staff. Luis Clemente, COO, Acciona 3D Concrete Printing Business, said: “We are glad that the government of Ajman has chosen us to carry out this project. This project allows us to showcase another way of applying 3D concrete printing technology: making iconic, innovative and sustainable urban street fittings. It is also the first to be carried out using the Powder Bed technology in the Middle East. The benefits of manufacturing this type of urban furniture with our 3D concrete printing technology are the reduction of waste, the lessening of CO2 emissions and the possibility of having total freedom over the design.”

10 APRIL 2020

UAE dealership Al Tayer Motors has been awarded multiple certifications for International Organization for Standardisation (ISO) management systems from Intertek. According to the leading Quality Assurance provider, the certifications were earned after reviewing the Ford, Ferrari, Lincoln and Land Rover dealer’s facilities in Dubai and the Northern Emirates. The sites conform to the latest global standards for environmental, occupational health and safety, business continuity and energy management systems, said Intertek. Certification process included a four-month-long

audit and certification process by Intertek experts. This achievement demonstrates that Al Tayer Motors showrooms, service centres and workshops operate as per global best practices to provide a safe, environmentally friendly, and secure setting for customers as

well as employees, said Intertek. It added that Al Tayer Motors “embarked on many internal initiatives to help achieve these certifications” which included employee training, accident prevention measures, water and energy saving initiatives, site inspections and compliance.

EGYPT MULLS ALTERNATE E-WASTE SCHEME WASTE MANAGEMENT Egypt’s Ministry of Environment has announced that it is preparing to launch the E-Tadweer application, in collaboration with the Ministry of Communications and Information Technology, which will enable citizens to dispose of their electronic waste and reduce their consumption of electronic devices. Egypt’s Minister of Environment Yasmine Fouad said that efforts are underway to implement the application and that it will enable citizens to gain incentives in the form of discount vouchers that

can be used in purchasing appliances. The government has granted licenses to seven factories so they could safely recycle electronic waste. Additionally Minister Fouad added that the ministry is developing legislation to convert the informal sector working in e-waste into an official sector in cooperation with the United Nations Development Program for the safe disposal of electronic waste. She said that this is in response to the trend of digitisation as well as the expansion of the use of solar panels which will result in

increased e-waste, and the challenges facing its sustainable management. It coincides with the government’s strategy to safely get rid of solid waste, medical waste and agricultural leftover, while also launching its new solid waste collection system in different governorates. Following on an MoU from 2016, between Egypt’s Ministry of Communications and the Swiss Embassy ‘to support the integration of small- and medium-scale companies in recycling electronic waste in could be pushed forward in Egypt.

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LAUNCHES

GENESIS G80 REVEALED WITH GV80 GIVEN LAUNCH DATE / KNIGHTLY ARIYA IS LEADING NISSAN’S NEW ELECTRIC VEHICLE CHARGE

LAUNCHES ATHLETIC ELEGANCE

MAX POWER 315PS

Birth of a new Genesis G80 HYUNDAI PLACES ALL-NEW G80 AT THE CORE OF THE GENESIS MODEL LINE-UP AND OFFERS A UNIQUE INTERPRETATION OF THE MIDSIZE LUXURY SEDAN Genesis unveiled the all-new G80 last month to online audiences via a series of design renderings. The all-new G80 is the thirdgeneration model which leads Genesis in the luxury market as a mid-sized, executive luxury sedan. “The Genesis design DNA begins from the logo itself,” said Luc Donckerwolke, Executive Vice President, Chief Design Officer of Hyundai Motor Group. “The crest of the logo becomes the Crest Grille and the two lines of the wings become the Quadlamps. In other words, the design starts with the brand, and design is the brand.” The “Athletic Elegance” design language allows variations in design interpretations by enabling a carefully-considered balance between the two opposing characteristics, Athleticism and

12 APRIL 2020

Elegance. The all-new G80 is the core of the Genesis model line-up and offers a unique interpretation of the midsize luxury sedan. In particular, the Crest Grille, and the two lines of the Quadlamps circumventing all sides of the vehicle are signature design elements of the brand, first introduced in the GV80 and now in the all-new G80. “A relationship begins at first sight. The distinctive “two lines” signature of the Quadlamps presents a clear and unique Genesis identity within seconds,” said Sang Yup Lee, Senior Vice President, Head of Genesis Design. “No matter what body type, sedan or SUV, the Quadlamps and Athletic Elegance design language present a distinctive brand identity, and this will enable

Genesis to offer a fresh alternative within the existing luxury space.” The G80 offers uncompromising style and practicality representing the most modern interpretation of the classic sedan profile with an ideal rear-wheel drive proportion and smooth coupe like roofline. The side features a long sweeping Parabolic Line from front to rear flowing gently downwards, evoking the elegance of classic cars of the past. This is counterbalanced with an upswept chrome line to maintain directional posture. The sharp athletic power lines of the front and rear fenders emphasize the powerful stance of the 20-inch wheels. The rear image is defined by the Quadlamps and the horseshoe shaped negative

surface of the decklid. The trunk release button and surrounding chrome garnish mimics the shape of the Genesis logo to reassert the brand’s visual identity. “Inside, the Beauty of White Space’ theme represents our journey to achieve the perfect balance between personal space and state-of-the-art technology.” said Sang Yup Lee. “We question the status quo. Technology should not dominate and only present itself when necessary. This is the new luxury experience our Genesis customers expect in today’s high-end user experience.” At the front, the dashboard is deconstructed to an expansive open space featuring a widescreen 14.5-inch infotainment screen. The slim air conditioning vent visually stretches the width of the cabin.

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LAUNCHES

ARIYA CONCEPT ARMOURS UP

NISSAN TAKES CUE FROM KNIGHTS AND REIMAGINES THE GRILLE BY DONNING A ‘SHIELD’

DECONSTRUCTIVE INTERIOR DESIGN The dashboard has been deconstructed to an expansive open space featuring a widescreen 14.5-inch infotainment screen.

CORE OF THE LINE-UP The all-new G80 is the core of the Genesis model line-up and offers a unique interpretation of the midsize luxury sedan.

Special care was taken to reduce the thickness of the A-pillars and the size of the rearview mirror, giving the driver a relaxed and panoramic view when seated. The all-new G80 will debut this month and features a new design, platform, powertrains and advanced driver assistance systems (ADAS). The 2021 Genesis GV80

also goes on sale this summer with a 2.5T inline four-cylinder turbocharged engine or a 3.5T V-6 twin-turbocharged engine. GV80s equipped with the 2.5T engine will be available with rear-wheel drive (RWD) or optional all-wheel drive (AWD), with a starting Manufacturer’s Suggested Retail Price (MSRP) of $48,900.

Ariya Concept shows how the new era of EVs will be a “renaissance for technology and design”. The fundamentals of the automobile have been largely unchanged for over a century. With the coming mass adoption of electric vehicles, new opportunities are opening up to reinvent the ways we construct and shape cars and integrate them into our lives, says Nissan. The Nissan Ariya Concept is the first example of an entirely new design direction for the company. It features a spacious, premium cabin with advanced technology and a body that conveys the pure, clean nature of electric cars, which don’t need a traditional open grille to let air cool an engine. As a result, designers were able to experiment with the concept’s signature V-motion design, creating the “shield.” Traditional hand-held shields used in battle merged function and design, utilizing strong materials with intricate designs meant to communicate prestige and strength. The shield on the Ariya Concept shares the same statement, offering much more than an aesthetic placeholder for a grille. The final look and application is not only striking, it also allows the advanced technology behind it to work through the design elements without interference. “By replacing the conventional grille with the tech shield – with innovative 3-D texture within that goes beyond

aesthetics – we wanted a way to highlight the technology within the vehicle, just behind the surfaces,” said Alfonso Albaisa, senior vice president of global design at Nissan. “In this case, its advanced technology that helps the Ariya Concept read the road and visualize things the driver can’t see making what is invisible, visible.” The concept’s 100% electric vehicle platform allowed for new approaches to existing components, removing fundamental limitations. Traditional grilles on an internal combustion vehicle have taken all shapes and forms since their inception, but have needed to maintain a level of cooling for the vehicle’s engine cooling system and be strong enough to deflect the occasional rogue rock in flight. These functional aspects have limited their design, look and feel. Since the Ariya Concept has no engine, a grille in the traditional sense is unnecessary. Designers decided to repurpose this space to add a new type of frontal fascia. The shield is constructed as a single piece with a geometric traditional Japanese pattern composed within for a new EV expression while hinting at Nissan’s J-DNA. “The surface has no gaps,” explained Program Design Director Giovanny Arroba. “It’s smooth like a sheet of silent water, with the kumiko pattern sitting just underneath the surface.”

SPECIFICATIONS Model

3.9 Premier

Engine

DOHC with Dual CVVT

Displacement

3,778cc

Max. Power

315PS/6,000rpm

Max. Torque

40.5kg·m/5,000rpm

Fuel Tank

77L

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CONCEPT GRILLE NEW 3-D TECH SHIELD APRIL 2020 13

FEATURE

RIDING THE STORM

T&FME takes a look at how the automotive industry is dealing with the threat of the Coronavirus

he commercial vehicles and automotive industry enters April under arguably the most pressure since the Second World War – and certainly the oil crisis of the 1970s. The industry has blossomed in the intervening decades as a major beneficiary of the globalisation; making it possible to place plants across the world and plugging into a vast network of factories and suppliers. This has allowed many brands to ride out the booms and busts of economies and extend their reach into fleets working in every corner of the globe. The emergence of the Coronavirus at the beginning of the year (see page 36) is a considerable challenge in the short term; shutting down whole sections of their supply chains and freezing what had been promising

APRIL 2020

progress in 2019. The ongoing Chinese and US trade battle may have been causing uncertainty before but now there is real concern that a global recession good emerge; even if the disruption caused by COVID-19 is only for a few months (albeit that seems unlikely as T&FME goes to press – Ed). The virus started in the automotive heartland of China and it is of short coincidence that it has hit in Europe’s manufacturing centres, particularly in Italy which has suffered more than most countries. Germany and France, home to brands such as Daimler, MAN Truck & Bus and Renault, have consequently brought in draconian measures not seen for 80 years with borders closing and the movements of people under close scrutiny. By the middle of the month, the European Automobile Manufacturers’

The health of those people that are the backbone of our industry, and their families, is paramount ”

Association (ACEA) was describing the effect of the coronavirus on society and the global economy as unprecedented, “with grave consequences for the automobile industry. Indeed, most of the members have already announced temporary closures of plants due to collapsing demand, supply shortages, and government measures, and are facing cases of corona infections and quarantines among their employees.” Eric-Mark Huitema, ACEA’s Director General says it is clear that this is the worst crisis ever to impact the automotive industry. “With all manufacturing coming to a standstill and the retail network effectively closed, the jobs of some 14 million Europeans are now at stake,” he said. “We call for strong and coordinated actions at national and EU level to provide meconstructionnews.com

FEATURE

immediate liquidity support for automobile companies, their suppliers and dealers.” While Huitema welcomed policy measures undertaken by European governments to offer financial support to businesses and their workforces, he reached out to the European Commission asking for urgent dialogue and new measures to protect the automotive industry on the continent. “We now need an urgent dialogue with the President of the European Commission to do two things,” he wrote in an open letter. “Firstly, to take concrete measures to avoid irreversible and fundamental damage to the sector with a permanent loss of jobs, capacity, innovation and research capability. Secondly, Europe should prepare to stimulate the recovery of our sector, which will be a key contributor to the accelerated recovery of the European economy at large. We stand ready to work with the European Commission, national governments and other stakeholders to navigate through this unfolding crisis,” Huitema stressed. According to the ACEA figures, vehicle manufacturers in the EU operate 229 vehicle assembly and production plants, directly employing 2.6 million Europeans in manufacturing. The wider automotive sector provides indirect and direct jobs for 13.8 million people in the EU. “The health of those people that are the backbone of our industry, and their families, is paramount to Europe’s automobile manufacturers,” said Huitema. Huitema and the ACEA believe it is vital to keep the production and supply of spare parts going, as well as vehicle service networks. They argue this is essential “not only for the maintenance of vital logistics”, but also for the work of emergency services like ambulances, firefighters, law enforcement, relief organisations and other public (medical) services. Huitema added: “The free flow of medicines, food, fuels, equipment and supply parts across the EU must be guaranteed under all circumstances.” The month of March saw the production of vehicles on Europe systematically shut down

A MANUFACTURING CENTRE The automotive industry is a huge employer in Europe with vehicle manufacturers operating 229 assembly and production plants and directly employing 2.6 million, and millions more in related sectors.

on a predominantly short-term basis but with many industry observers expecting it to be weeks or months before factory gates reopen. Ford, Volkswagen, BMW, SKODA and Nissan had all shut-down by the middle of the month. Daimler also suspended the majority of its production in Europe, as well as work in selected administrative departments, for an initial period of two weeks on 17 March. “By taking this action, the company is following the recommendations of international, national and local authorities. The suspension applies to Daimler’s car, van and commercial vehicle plants in Europe and will start this week,” explained the company in a statement. “Connected to this is an assessment of global supply chains, which currently cannot be maintained to their full extent. An extension of this measure will depend on further developments. Wherever operations need to be continued, the company will take appropriate precautions to prevent the infection of its employees.” With these closures, Daimler – admitting that the economic effects “cannot be adequately determined or reliably quantified” at this time – said it was helping to protect its workforce; to interrupt chains of infection;

With all manufacturing coming to a standstill, the jobs of 14 million Europeans are now at stake”

and to contain the spread of the pandemic: “At the same time, this will help the company to prepare for a period of temporarily lower demand and to protect its financial strength.” Within Daimler, Mercedes-Benz trucks, FUSO and Daimler Buses “committed to do everything possible” to continue to supply customers with spare parts and maintenance services in - subject to respective legal and official requirements. “We pursue the clear goal of maintaining our service network across Europe with up to 3,000 centres,” said the company in a second statement released on 24 March. “Corresponding plans are being drawn up for our own companies and for partner companies. The teams rely on pragmatic and uncomplicated solutions to keep our customers’ vehicles running and supplied with spare parts.” “Our colleagues in our service facilities make a significant contribution to ensuring our society can cope with the current state of emergency as well as possible, and we therefore thank these everyday heroes from the bottom of our hearts,” added Martin Daum, Chairman of the Board of Management Daimler Truck AG. “Trucks and buses are particularly important given the current situation. Right now commercial vehicles for transport and logistics must be available to ensure supply and disposal, as well as emergency services. Therefore it is crucial that our service centers remain in operation wherever possible.” Following suit, Scania initiated a plan to stop operations at most of its European production units on 25 March, citing component shortages and the major disruptions that have occurred in the supplier and logistics chain as a result of the spread of COVID-19 in Europe. “To ensure our customers’ vitally important transports for society, our service workshops and parts centres will continue their operations,” said Scania’s President and CEO Henrik Henriksson. Scania had expected to resume production within two weeks in Sweden, the Netherlands and France – with talks ongoing

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APRIL 2020

FEATURE

with unions and worker associations on how to navigate through a difficult time for the business and its thousands of workers. “The management and employee representatives both highly appreciate the state support measures that are now being made available in the countries where our staff now temporarily will lack work,” says Henriksson. With the spread of the virus in South America considered to be some weeks behind Europe and Asia, Scania’s industrial operations in Latin America, which account for about one-fifth of the company’s production volume, were to continue as planned (as T&FME went to press). With Scania closing down, it was no surprise to see Volvo Group also announcing that it would put all of its 20,000 staff in Sweden on a short-term, temporary lay off-scheme starting last month and amid a close down of all production in the country because of the outbreak. “The consequences of the Covid-19 outbreak is affecting the Volvo Group, and there is a considerable risk of a material financial impact on the Group as from mid-March. The Volvo Group and its suppliers are continuously working to minimize any consequences for customers and mitigating the impact on the Group. “The impact is related to the general situation and decisions made by local authorities resulting in among other things workforce shortage in the production and supply chain disruptions. There is also a potential impact on demand going forward,” said the company in a statement. “Given the uncertain situation, it is not currently possible to predict the full

WORKING TOGETHER Manufacturers are working closely with labour associations and unions to protect worker jobs.

The management and employee representatives both highly appreciate the state support measures”

BEARING THE BRUNT While the Coronavirus saw signs of slowing in China, Europe was yet to reach the peak of infections going into April.

APRIL 2020

potential impact on the Volvo Group.” Consequently, production at its large plant in Gothenburg and in Ghent would be stopped, with facilities at subsidiary Renault Trucks in France also temporarily closing. “We have reached a frame agreement with the Swedish unions about short-term, temporary lay offs of all employees in Sweden,” SVP communications Claes Eliasson remarked. “We of course hope for it to be as short as possible. But we are doing this to protect staff, the company, and society,” he said. Although it doesn’t have production setup in Europe, Volvo’s UD Trucks (T&FME understands that Isuzu Motors has yet to complete the acquisition of the venerable truck-maker) which produces trucks in Japan and Thailand also said it is working to prevent the spread of the COVID-19

virus and secure the health and safety of its employees and all stakeholders. March saw Nissan stop production in several domestic assembly factories in Japan, because of a shortage of Chinese parts. News agency Reuters also reported that Honda says it new car deliveries are hindered by a shortage of Chinese components and Mazda is now sourcing car and SUV parts from Mexico despite a significant increase to its costs.While there is undoubtedly disruption in the market, Japan has yet to see an outbreak on the scale of China and Europe and so production continued with UD unveiling details of its own measuress, including expanding flexitime work schedules, strongly encouraging administrative staff at the headquarters to work from home and asking employees to refrain from face-to-face meetings and prioritising online meetings. “UD Trucks has been a leader in implementing work style reforms such as working from home (telecommuting), flexitime, and promoting the digitisation of the workplace. As a result, the company has established a robust and reliable digital infrastructure to ensure smooth and secure communication across internal and external networks,” said the company in a statement. “Taking advantage of the digital tools that enable workstyle reform, UD Trucks administrative staff can effectively work from home in order to maintain the expected level of customer service and business communication while reducing the risk of infection among employees. UD Trucks will continue to give the highest priority to measures that prevent the infection of the coronavirus to help ensure the health and safety of our employees and all stakeholders.” The situation at UD was in contrast to South Korea where Hyundai Motors shut down a factory in after a worker tested positive for the coronavirus, with Reuters reporting that the closure would disrupt production of popular models of the Palisade, Tucson, Santa Fe and Genesis GV80. Hyundai operates five car factories in Ulsan which is close to Daegu – the most affected area in the country and has an annual production capacity of 1.4 million vehicles (30 percent of its global production). Hyundai employs 34000 workers there making it the world’s biggest car complex. “The company has also placed colleagues who came in close contact with the infected employee in self-quarantine and taken steps to have them tested for possible infection,” Hyundai Motors said. meconstructionnews.com

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INTERVIEW

SEIZING THE METAL

Renault Trucks’ boss Bruno Blin looks back on a challenging year for the industry

ith manufacturers scaling back their manufacturing and people being asked to avoid meeting in Europe, Renault Trucks’ EVP Bruno Blin sits comfortably, broadcasting to the world via the internet. It is an unprecedented move to provide an update on the French company’s progress and how it hopes to deal with the continuing challenge of the Coronavirus within the industry. “2019 was a very contrasting year but we have seen the market going down at the end of the year. But I have to say that I am very happy,” he begins. “We have been able to invoice 54,000 trucks in 2019, which is roughly 1,000 less than 2018. A pretty 18

APRIL 2020

good performance in a turbulent market. It was great performance on used trucks and we have invoiced 9,400 Vehicles, which is 1,000 more than 2018 or 11% more.” The increasingly important spare parts business at Renault Trucks also saw a 3% rise in turnover. He adds that light duty trucks saw a decrease of 1.7% in sales, a result he suggests, that is a consequence of vehicles simply doing less mileage in the year. He continues: “If we think about the market share, I would say that it’s also a stable performance in a kind of challenging and changing market. It was very dynamic at the first part of the year (plus 15%) but then there was a major slowdown in the second half of the year. We have seen an 18% lower market at the end of 2019, but we have been able to maintain our market

We have gained market share in Middle East, Africa and Turkey”

share around 8.5% on vehicles over 6t. If we look at heavy duty it is minus 0.1%. And if we look at the medium duty it is plus 0.3%.” While he is satisfied with the financial results for the year, Blin is aware that the company has lost ground in some European markets, where it has been gaining ground in recent years. “If we look at the map of Europe, basically we have been up, or stable, in 16 markets when it come to the market share, but we have been dropping in nine countries,” he explains. “And, of course, we have to react on that...the idea is to go up everywhere. We really have a strong ambition to go up in Europe. This is why we have decided to change our setup a little bit.” He says this change in approach has led to the creation of teams dedicated to its meconstructionnews.com

INTERVIEW

brands in all the markets except the north of Europe:“This means that we are optimising the organisation and we will have local teams dedicated to Renault Trucks; really thinking from the morning to the evening of selling and focusing on the success of our customers. That I think is very important.” Looking further afield, Blin describes a more difficult scenario for the firm to navigate. He estimates that global sales of new trucks could fall by 15% in the year. The Middle East, he says, is among those territories where the company is able to hold its ground. “We have gained market share in Middle East. We have gained market share in Africa and Turkey, where, for example, we have had a record year for Renault Trucks,” he enthuses. “We went from 5.8% to 8.8% percent in 2019. There has been a fantastic job done by the marketing company in Turkey, supported by Renault Trucks’ Financial Services. It is really a great, great performance.” Elsewhere in the region, Blin muses on the impact that the changing political situation in Algeria where the start-up of local knock-down kit production made 850 trucks in 2019. The oil-producing country is a feather in the cap of the French company as it enjoys a 26% share in the market. Blin it is bullish on the company’s plans to build on it legacy in the North African market despite the government signalling it may pull out of trade arrangements made between the EU and former leader President Abdelaziz Bouteflika. “I am very happy with what I have seen – I have seen a great factory. I have seen very engaged and skilled people working in this factory, and that of course, is very encouraging for the future. In 2019, we produced 850 vehicles – mainly C and K range type of vehicles. In 2020, we will start to go for the D Range.” He notes that in Algeria, Renault Trucks has more than 500 people working on-site. “It’s a very important country and we know that we have some turbulences, some announcements from the government a new charge. We will see how this will develop but, of course, our intention is to stay and stay strong in Algeria.” Beyond Algeria, Renault Trucks has bolstered its network and strung new distribution partners in Egypt, Iraq and Lebanon: “I think it’s important also to say that we are extending our scope in the Middle East.” meconstructionnews.com

The last year has seen many of Renault Trucks’ competitors gear-up their electric vehicle offering and while Blin stresses that the company is focused on providing a choice – including natural gas powered vehicles – to customers he is animated as he talks about the start of series production of the company’s D ZE and D-Wide ZE ranges at its plant in Blainville-sur-Orne. The company can now offer the widest range of electric trucks from 3.1t up to 26t, he claims. “It’s a very important and we are extremely proud of this,” he explains, adding that these vehicles will be assembled in the same line as the regular of vehicles. “We use a fishbone type of factory as we do for our diesel models. The D and the D-Wide will be assembled on the same

I would say that it’s a stable performance in a challenging and changing market”

lines and at the end of the line we will have some additional testing for the ZE vehicles. We are the first one doing that.” Blin believes it will be trucks most suited for urban applications where they will be most popular. He expects that, by 2025, 10% of vehicles sold will electrically powered. “Today 50% of the vehicles that we are selling are used or are operated in the urban environment,” he says. “We already have a pretty big market share position in this environment, and we know electrification will start in the cities.” More immediately, the commercial vehicles industry has to face up to the challenge of the Coronavirus outbreak. Blin says the company is taking the situation very seriously.

GAINING SHARE IN THE MIDDLE EAST Blin says that Renault Trucks gained market share in the region during 2019 and had a record year in Turkey.

APRIL 2020

INTERVIEW

A YEAR OF STABILITY Renault Trucks recorded invoices totalling 54,000 new trucks in 2019, down just 1,000 units on the year before.

USED TRUCKS BECOMING MORE IMPORTANT “Used trucks are very important for Renault trucks and on the top of our agenda. We have invoiced more 9,400 vehicles which is 11% up compared to 2018. We have been keeping good control of our inventory which in this situation and period of time is very important because the price in the market

has been has been going down. For us it was key to maintain a good level when it comes to the stock and inventory. “I think the good performance is thanks to the different activities that we have performed. For example, we have 23 used trucks locations and we want to increase this level of sites. We

want to add 70 new locations and have tried to deploy an offer that differentiates us compared to our competitors. For example, we have the T selection - carefully selected, recent Vehicles - where we check 200 different points and offer a guarantee of two years or 200,000 kilometers.”

“We need to handle it in a very cautious way. The first thing that we want to do is to protect our people. However, we are monitoring the situation step by step; continuing to operate our business and serve our customers. Our factories are still up and running and in one way it’s business as usual. But at the same time, we are also very careful. We are limiting traveling, meetings, conferences, to limit contamination.” What does Blin think the impact will be on the industry? “I think it’s little bit too early to have a clear view. We know that it will have an impact and we are preparing ourselves.”

NAVIGATING THE CORONAVIRUS Blin says that Renault Trucks is taking the threat of the Coronavirus seriously but doesn’t want to leave customers behind.

THE WIDEST RANGE IN THE MARKET According to Bruno Blin, the start of series production of its electric trucks gives it the widest offering for fleets in the industry.

APRIL 2020

meconstructionnews.com

FEATURE

RISING AGAINST THE TIDE The UAE and KSA among the elite in this year’s Agility Emerging Markets Index amid recession worries

oving into 2020, the world faces a tempestuous economic scene. During 2019, global trade growth slowed to an estimated 1.1%, the lowest level since the 2008-09 financial crisis, and a number of factors are combining to weigh on prospects as the new decade begins. Tariffs and tensions between the world’s largest consuming and producing nations; an anaemic European Union economy; slowdowns in key developed and emerging economies; and social and political unrest are just some of the factors causing concern for leaders across the logistics industry. This is the backdrop against which twothirds Agility Emerging Markets Logistics Index Survey respondents say a global 22

APRIL 2020

economic recession is likely or very likely in 2020. In the past year, trade growth has fallen and investor confidence has weakened as the future of globalisation, which has played such a significant role in emerging market growth over the last four decades, has been fundamentally questioned. To assess and understand these trends and their effects on 50 of the world’s most promising emerging logistics markets, the Agility Emerging Markets Logistics Index 2020 examines three key areas for logistics market development: Domestic Logistics Opportunities; International Logistics Opportunities; Business Fundamentals. Across each, the Agility Emerging Markets Logistics Index methodology utilises a unique set of variables that measure current, short-and medium-term performance across structural

During 2019, global trade growth slowed to 1.1%, the lowest level since the 2008-09”

and cyclical factors in each country’s logistics markets and in key vertical sectors. As a result, the Index weighs the current opportunity and future potential a market offers against the operational realities and the openness, robustness and fairness of the market’s business environment. The 2020 Agility Emerging Markets Logistics Index presents a data-driven analysis of 50 of the world’s most promising emerging logistics markets, reflecting the complexity, connectedness and opportunities each market provides. With the leading six markets unchanged year-on-year, the Agility Emerging Markets Logistics Index confirms that a group of elite emerging logistics markets have established and entrenched their positions through a mix of domestic market strength, international market connectivity and robust business environments. meconstructionnews.com

FEATURE

Leading the way is China. Despite uncertainty over the trajectory of its economy and significant disruption to its trade as a result of the trade war with the US, the world’s second largest economy has distinct structural advantages. The scale, capacity and capability China has developed so rapidly over the last several decades have combined with a vast and increasingly rich population to produce high levels of resilience to the effects of the trade war. China maintains particular strength in the international logistics opportunities subIndex, which propels its overall performance. The market’s export-oriented manufacturing sector remains a global leader while favourable import policies are helping to fuel consumer demand for international brands, resulting in high inbound e-commerce growth. Second placed India, meanwhile, saw much more varied performance. The market faces several challenges. GDP growth is faltering – at 4.5% in Q3 2019, growth has slowed for seven consecutive quarters and is at the lowest level seen since 2013. The country’s automotive sector has slumped as consumer lending has fallen, which combined with slowing economic growth has constrained spending and undermined confidence. These factors are amongst the reasons India’s business fundamentals rank collapsed, dropping the market eight positions to 18th. The challenges appear manageable, however, with analysts calling the credit squeeze ‘cyclical’. While 2020 may be another tough year, medium- and long-term prospects remain bright. The remaining markets in the top six demonstrate how in 2020 it is possible for smaller economies with highly liberalised and open business environments to compete with structurally larger emerging logistics markets. Not only do the UAE, Saudi Arabia and Malaysia offer highly attractive investment prospects, each continues to build strength through further reforms and incentives, increasing attractiveness for new investors and established operators alike. Elsewhere in the Agility Emerging Markets Logistics Index 2020, there is a greater degree of movement and volatility. Egypt – up six positions to 20th – has made rapid progress as a result of economic growth. The government successfully implemented a first wave of macroeconomic and structural reforms that addressed many entrenched issues and helped to stabilise the economy, spur growth and lay the groundwork for robust private sector participation in the economy. Nigeria – rising eight positions to 35th – is meconstructionnews.com

DELIVERING IN A DIFFICULT CLIMATE Logistics providers have a great deal of factors weighing upon them. They are heavily exposed to the increase of trade barriers and subsequent uncertainty that was rife in 2019.

The UAE’s business environment remains the pillar of strength as the country moves even further ahead”

Africa’s biggest oil exporter and has the largest natural gas reserves on the continent. After the oil price crash of five years ago, Nigeria’s oil sector was thrown into chaos. Yet in 2018, Sub-Saharan Africa’s oil market grew by 6.5%, while the country’s manufacturing PMI reached a one-year high in Q3 2019 to indicate improving private sector growth. This helped drive Nigeria’s domestic logistics opportunities sub-Index rank to 16th, some nine positions higher than last year. Several other markets see notable movements in 2020. The Agility Emerging Markets Logistics Index 2020 also reveals the highly integrated position of emerging markets in the global economy and the extent to which that integration leaves them vulnerable to changes in macroeconomic trends an

policy decisions of global partners. For each market subject to sanction or increased trade barriers, theIndex reveals how others find new opportunities for growth. As uneven economic drivers continue into 2020, crucial questions around the future of the global economic growth and emerging markets’ role in it remain unanswered. Combining all responses that predict a recession shows an almost overwhelming 64% of the 780 survey respondents expect a global recession in the year ahead. Downward pressure on global trade volumes, uncertain growth prospects and the trade war between the US and China, in addition to the wider move towards protectionism, are behind the pessimistic outlook amongst survey respondents. Logistics providers have a great deal of factors weighing upon them. They are heavily exposed to the increase of trade barriers and subsequent uncertainty that was rife in 2019. With few of those measures forecasting a significant recovery in 2020 – the World Bank revised down its 2020 global GDP forecast to 3.6%, while the global manufacturing PMI registered negative growth for six consecutive months during 2019, for example – a global recession is clearly a key concern for survey respondents. It is important to note that even though the indicators of economic activity for the year ahead forecast slower growth, very few, if any, actually predict a global recession. This suggests that survey respondents’ fears may be overly pessimistic. These mixed messages of forecast data and opinion reflect a fundamental uncertainty that may carry on well into the 2020s. Over the last several decades the role of

GLOBAL UNCERTAINTY IS A KEY CONCERN The World Bank revised down its 2020 global GDP forecast to 3.6%, while the global manufacturing PMI registered negative growth for six consecutive months during 2019, for example – a global recession is clearly a key concern for survey respondents.

APRIL 2020

FEATURE

emerging markets in the global economy has changed. Intraemerging market trade has grown and populations have expanded and become increasingly wealthy. Domestic markets have become more dynamic while investments have improved infrastructure and labour markets have benefitted from enhanced skills. Despite these factors driving global emerging markets forward, however, the progress has been uneven, leaving individual markets vulnerable to the fortunes of the wider global economy. In Asia Pacific, selected by survey respondents as the emerging market region most at risk from a global recession, economic activity has been decelerating in recent years. While growth in some regional markets remains robust – including key export markets like Vietnam as well as in more nascent manufacturing locations such as Cambodia – export growth has slowed. Despite efforts by regional exporters to diversify economic activity, survey respondents evidently have concerns about the region’s ability as a whole to withstand further falls in global demand. Perhaps more notably, survey respondents’ selection of Asia Pacific as the region most at risk from a global recession points to a question over the sustainability of intra-regional trade lanes. During the 2010s, as China has moved through the manufacturing value chain and nearby markets – predominantly those in South East Asia – developed manufacturing capabilities and skills to participate in those supply chains, regional trade boomed. The implication from survey respondents is that regional demand from emerging consumer markets is unlikely to provide sufficient volume to buoy the fortunes of logistics

FEW PREDICTING A DOWNTURN Pre-Coronavisrus, indicators of economic activity for the year ahead forecast slower growth but very few, if any, actually predict a global recession.

providers heavily exposed to intra-Asia trade. The South America and the Middle East & North Africa regions come in 2nd and 3rd place, according to survey respondents. In South America, lower commodity prices, economic challenges, and more recently civil unrest, have weighed on growth in recent years. In the Middle East & North Africa, it appears economic diversification programmes have yet to fully convince survey respondents the region as a whole can withstand global shocks to trade or falling hydrocarbon prices. The UAE’s business environment remains the pillar of strength in 2019 as the country moved even further ahead at the top of the business fundamentals sub-Index ranking. The Emirates added to its open financial sector, transparent regulatory system and corruption protection frameworks in 2019 with progress

Vision 2030’s aim to reduce Saudi Arabia’s economic dependence on oil has become quite apparent in 2019”

UAE IN TOP POSITION FOR BUSINESS FUNDAMENTALS UAE maintains its top position in the business fundamentals sub-Index as it added strength to its business environment with a better regulatory situation, particularly in terms of access to public spending budgets for SMEs. As SMEs contributed less to GDP and created fewer jobs, UAE authorities announced plans to raise cash flows to SMEs via quicker payments of government invoices, cost reductions and increased

APRIL 2020

capital project allocation. These initiatives would provide an increase of more than $800million to the sector. In addition, steps to increase SME access to financing are planned, as is a new insolvency framework. The Middle East once again features heavily at the top of the rankings. Meanwhile, Saudi Arbia is continuing reforms across its economy, opening formerly restricted sectors of its market

to increased levels of foreign ownership and investment as well as providing stimulus for private sector job creation. It gained two positions in this year’s business fundamentals sub-Index to rank 3rd. While remaining a top 10 market in the business fundamentals sub-Index, Oman fell three positions to 7th as regulatory frameworks and judicial oversight of the private sector weakened during 2019.

towards a comprehensive national SME development strategy. SMEs have been drivers of wider growth in the UAE for the last several years, helping to offset lower hydrocarbon revenues and employing some 86% of the non-oil private sector workforce. However, with SMEs’ contribution to economic growth and job creation declining, UAE authorities have announced plans to boost cash flows to SMEs via quicker payments of government invoices, cost reductions and increased capital project allocation. Combined, these initiatives could provide an injection of more than $800million to the sector, while further reforms to promote SME prospects, including increased access to financing as well as a new insolvency framework are planned. An improved international logistics opportunities sub-Index score saw the UAE rise two places to 9th. As a result, the UAE now features in the top 10 of all three individual sub-Indices for the first time. With an extra $1.2billion invested into its pharmaceutical sector to drive export growth to high demand areas like Africa and Asia Pacific, as well as higher imports to support construction for Expo2020, the UAE remains the GCC region’s dominant sea freight hub. The port and its surrounding free trade zone at Jebel Ali are the region’s key gateway for regional and east-west trade. Saudi Arabia’s 6th overall ranking is primarily a result of notable improvement in its business fundamentals, with improvements over the last 12 months that stand out even against regional peers. The root of the Kingdom’s gains are the transformative plans that comprise Vision 2030, a nationwide economic strategy that aims to open and diversify the domestic economy and integrate it more closely with the global market. Vision 2030’s aim to reduce Saudi Arabia’s economic dependence on oil has become quite apparent in 2019 as World Bank forecasts show annual GDP growth slowing to just 0.8% for the year. This is primarily a result of agreed upon oil production cuts, but also reflects the ongoing lack of diversity in the domestic economy. Meaningful progress is needed to grow the non-oil economy by the targeted ten-fold increase over the next decade. The challenges are vast. Despite pending changes to FDI regulation – including the decision to allow foreign investors to own 100% of business in formerly blacklisted sectors such as warehousing – Saudi Arabia remains a restrictive, if now less prohibitive, market for foreign investors to operate logistics assets and businesses domestically. meconstructionnews.com

FEATURE

HOLDING ONTO PROGRESS IN SAUDI ARABIA Agility’s view is that Saudi Arabia’s hard-won gains will be tough to build on without three things. A single supply chain and logistics regulator with the legal and administrative authority to impact change across all government agencies. A sole authority would eliminate confusion, duplication of effort and cost; adds transparency, brings accountability and cuts down on corruption. It would act as an honest broker and single source of truth for the private sector, in addition to freeing government ministries to focus on national-level policy rather than day to day customs and trade administration.

Digitisation of all supply chain, business and logistics processes across a common technology platform to dramatically improve capacity to manage change through the supply chain and its extended network of public and private stakeholders. Like other countries, Saudi Arabia has online platforms and single windows. They need to be integrated to be able to allow the public and private sector stakeholders to conduct, process and administer transactions from end to end, 100% online. In addition, it must be small business-friendly. Pay special attention to landuse policy and administration. This is an area plagued by

The lack of competition has led to underdeveloped logistics operations and services. The transformation process so far has helped to create opportunities for domestic and foreign investors and, assuming progress is maintained, the Kingdom’s potential as a logistics hub for regional operations will continue to develop. Alongside previously announced plans to increase the capacity and efficiency of Saudi Arabia’s sea ports, through which more than 90% of the country’s trade is transported, Vision 2030 is also spurring the development of free trade zones. The zones at Riyadh’s King Khalid International Airport and King Abdullah Economic City (KAEC) in particular have the potential to allow Saudi Arabia to compete with Jebel Ali. This would not only be as an import gateway for goods destined for the Kingdom but also as a key transhipment and light manufacturing hub for the GCC and the wider region. Development of the free trade zones has been allied with reform in the Kingdom’s customs regime, with clearing time at key gateways for certain goods reduced to hours or days rather than weeks in some cases. This progress has played a central role in Saudi Arabia’s rise of two positions in the business fundamentals sub-Index. Saudi Arabia, ranked 5th in the 2020 meconstructionnews.com

UAE, Saudi Arabia and Malaysia offer highly attractive investment prospects”

regulatory ambiguity and uncertainty. It leads to confusion and loss of confidence among investors. Land policy related to logistics should be the purview of a single regulatory entity with the ability to manage a land bank and make strategic, merit-based decisions. Smart land policy also requires careful planning and allocation of space at key entry/ exit nodes of major municipalities for truck checkpoints and yards, and safe loading and unloading between large trucks and smaller ones. Finally, we need better incentives, clearer rules and a more liquid property market, especially when it comes to transformation of agricultural land to logistics/industrial use.

Agility Emerging Markets Logistics Index, made strides in domestic logistics opportunities and improved business conditions. The country is in the midst of what might be the most ambitious economic makeover in the world as part of its Vision 2030 drive. As part of that effort, Saudi Arabia has spent more than $100billion on infrastructure and related projects intended to position it as a global logistics hub at the crossroads of Asia, Europe and emerging Africa. Saudi Arabia’s sweeping transformation is yielding results for shippers and others in the supply chain. In just a short time, the country has: Cut customs clearance times to 24 hours, down from 7-10 days; Cut maritime dwell times from 14 days to 4 days;

Reduced handling feeds for empty containers by 54%; Boosted to 55% the percentage of cargo declarations submitted prior to arrival. Saudi Arabia soared 30 places to No. 62 of 190 countries in the World Bank’s Doing Business 2020 study. That’s the good news. The bad news is that Saudi Arabia is still 86th in the world when it comes to the time and cost associated with cross-border trade. Rounding out the top 10 in the Agility Emerging Markets Logistics Index 2020 is Turkey, down one position from last year. Turkey seemingly finds itself in a period of transition as it diverges from the United States, a long-time ally, amid souring relations and inches closer to Russia for military and political support, particularly in reaction to conflicts across the Syrian border. Its economy has faced challenges too – a currency crisis in 2018 saw the lira lose close to one third of its value against the US dollar. This was followed by three consecutive quarters of recession ending in September 2019. The government’s forecast of 5% GDP expansion in 2020 is ambitious and hinges on confidence returning not only to consumer markets, but to business spending as well. Significant, too, is the underperformance of the domestic construction sector which has provided the basis of economic growth in recent years, but which contracted by 7.8% even as the economy returned to growth, official data shows. Turkey’s international logistics opportunities sub-Index rank remains its strongest, although it does slip two places to 8th in the sub-Index ranking. With 60 countries and 120 destinations within three-hours of Turkish manufacturing hub Istanbul, the market has meaningful potential for rapid improvements. Forecast growth in Egypt’s contract logistics and domestic express markets are relatively low, highlighting the potential for further gains in the coming years. TOP OF THE RANKINGS The Middle East once again features heavily at the top of the business fundamentals ranking with the UAE and Saudi Arabia leading the way.

APRIL 2020

FEATURE

THE KINGDOM RULES

Saudi Arabia set to be UD Trucks’ primary focus for 2020 after year of transition

he launch of the latest heavy-duty Quester, a ‘series of major fleet deals’ and the securing of a new retail partner in Saudi Arabia helped UD Trucks strengthen its foothold in the Middle East, East and North Africa (MEENA) region in 2019, the Japanese company has revealed. Described as another positive year despite ‘extremely challenging economic conditions’, the Volvo Group-owned Japanese brand said in a statement that it recorded sales increases in a number of key markets, in particular the United Arab Emirates, Kuwait and Oman. The company said that Saudi Arabia will be a major focus in 2020 after “was very much a year of transition for UD Trucks in Saudi Arabia”.

APRIL 2020

UD Trucks announced in December 2019 that it had appointed Volvo Trucks’ representative Zahid Tractor as its new exclusive importer and distributor in the county following a ‘mutual agreement’ to terminate its longstanding collaboration with Rolaco Group. “With the start of this exciting collaboration between the two companies, and underpinned by the ambition and professionalism of Zahid Tractor, 2020 is set to be an excellent year for the brand as it seeks to continue its growth and take customer satisfaction to a higher level,” said the company in its latest update. It added that in the UAE, sales were up almost 10 percent year-on-year, ‘despite the overall market shrinking’: “It was a similar story in Oman, with the market down but UD Trucks registering 10 percent growth. As a market, Kuwait bucked the regional

Our objective always has been, and always will be, to deliver the highest standards of customer service”

trend with truck sales increasing, helping UD Trucks to an impressive doubling of sales. The company maintained its number one position in Bahrain, while reinforcing its position in Qatar as the number one brand in the Japanese truck segment and number three brand overall, including the European manufacturers.” The company is continuing its investment into the East Africa region of recent years as it, “seeks to reactivate its presence there.” The company said it has been rewarded for its reactivation of Ethiopia with a doubling of its market share, while the brand also helped to inaugurate a UN driver school in the country - under UD/Volvo Group’s sponsorship, UD Trucks supplied three Quester models and ran numerous driving school sessions. It also re-commenced activities in Kenya, Uganda and Tanzania over the course of the year. meconstructionnews.com

FEATURE

“2020 will see a continued focus on this region, and particularly in Kenya where a local assembly project will be launched,” said UD Trucks. The company said the arrival of the New Quester in April had helped to boost its performance in the region: “The new Quester and medium-duty Croner, both of which are designed and engineered especially for the region, have been in high demand and were at the heart of the numerous major fleet deals that peppered the year.” Deals completed in 2019, included Kuwait Municipality purchasing 106 Quester and Croner models for waste management in September. The company also signed its first ever deal for 20 Quester 8x4 Mixers with Oryxmix in Dubai in the same month. The company also revealed that 118 Questers and Croners were sold to waste management specialist Lavajet in the UAE and 25 to Oriental Trading Co, “with many other similar agreements signed across the GCC and East Africa.” Mourad Hedna, president, UD Trucks MEENA, said the company will continue its strategy to grow by “reinforcing market share in countries where we are already present” and by entering a number of new markets. “Our objective always has been, and always will be, to deliver the highest standards of customer service because this is the only way to guarantee sustainable growth in the long-term,” he added. “We will continue to do this by collaborating closely with our regional partners while simultaneously remaining focused on that most valuable human capital: our employees. “Having strong partnerships in each

FOCUSSED ON SAUDI Mourad Hedna, president, UD Trucks MEENA, said a new distributor deal should boost UD Trucks in Saudi Arabia.

market is critical to our success, so it was a positive reflection on how we are doing that so many of our partners reconfirmed UD Trucks as their brand of choice, over the course of the year, highlighting their pride in working with the company and the very special family spirit that exists among all parties. This essence of close and positive collaboration was strengthened by the bodybuilders conference that was held in August and the annual partners conference that took place in September.” Talking to T&FME ahead of this year’s Truck Book, Hedna said that a key point of the company’s performance in 2019 – in his opinion – was the nature of UD Trucks’ fleet sales across the region. The company signed major deals with some of the region’s leading companies, including a first-of-its-kind deal with Oryxmix

2020 is set to be an excellent year for the brand as it seeks to continue its growth”

in Dubai for 20 Quester 8x4 Mixers, and an unprecedented multi-model deal in Kuwait for 106 units for Kuwait Municipality, he said. “This agreement in Kuwait was just one of a number of major contracts in the waste management sector that we have sealed over the past three years, including in Saudi Arabia and the UAE, as we have become a major player in this sector.” 2019 was very much a year of transition for UD Trucks in Saudi Arabia. Following a mutual agreement to terminate our collaboration with Rolaco Group, our previous partner in the Kingdom), its announced Zahid Tractor as the new exclusive importer and distributor of UD Trucks in the country. As a result, in 2020 the company will be very much committed to returning the brand to growth and working ever more closely with its existing customers, Hedna further explained “Across the region, we will continue to further support our business partners and customers to grow their businesses, with a focus on maximising their efficiency and profitability,” he said, “Customer satisfaction will continue to be a major focus for all of us in 2020. A key driver for our efforts in this field is what we call Quality Customer Pulse - this is a weekly meeting held at UD Trucks’ regional head office, bringing together the Sales, Aftersales and Marketing teams to discuss customers issues and feedback. We will work to solve issues raised by the customer in order to keep their businesses running; listen to feedback from customers across all markets so as to come up with tailored solutions; and communicate best practice to all markets to optimise the use of our trucks.”

A YEAR OF MAKING PROGRESS The past year has seen the Japanese brand make progress across the region, including the sale of 106 units to Kuwait Municipality.

meconstructionnews.com

APRIL 2020

FEATURE

VOLVO JOINS THE PARTY

Volvo Trucks’ four new heavies are a product of their time – and that’s a good thing

ot on the heals of the myriad of new truck generation announcements that we have seen in the past two years, Volvo Trucks new generation of heavy haulers and transporters arrived in early Spring just days after MAN Truck and Bus’ own reveal. Like that launch, the new Volvo FH 16, FM, FMX and FH are very much products of their time, eschewing the electric drivelines and autonomous features that the Swedish giant has been promoting in recent years, and are instead focused on the brand’s core strengths of green-aware tech, safety and productivity. Indeed, Roger Alm, president, Volvo Trucks placed the growing issue of driver recruitment and retention at the forefront of the reveal. A sensible decision given 28

APRIL 2020

that the company remains a major player in mature markets where finding new drivers is becoming increasingly difficult. “We are really proud of this big forwardlooking investment. Our aim is to be our customers’ best business partner by making them even more competitive and help them attract the best drivers in an increasingly tough market,” said Alm. “Drivers who handle their truck safely and efficiently are an invaluable asset to any transport company. Responsible driving behaviour can help reduce CO2emissions and fuel costs, as well as helping reduce the risk of accidents, injury and unplanned downtime. Our new trucks will help drivers work even more safely and productively and give our customers stronger arguments when competing to attract the best drivers.” In its launch notes Volvo points to

Drivers who handle their truck safely and efficiently are an invaluable asset to any transport company”

European statistics that estimate show that around 20 percent of all driver jobs are vacant on the continent. To help customers recruit and retain the best drivers, Volvo Trucks says it has focused strongly on developing the new trucks to make them safer, more efficient and more attractive working tools for qualified drivers. Consequently, the various truck models in Volvo Trucks’ range are available with many different cab models and can be optimised for a wide range of applications. In long-haul trucks, the cab is often the driver’s second home. In regional transport trucks it often serves as a mobile office, while in construction the trucks are robust, practical work tools. Therefore, visibility, comfort, ergonomics, noise level, maneuverability and safety were key focal points when developing all the new truck models, says Volvo Trucks. The outside of the meconstructionnews.com

FEATURE

BUILT TO HANDLE DANGEROUS CONDITIONS The new FMX comes equipped with a new traction control panel that helps the driver easily and quickly handle potentially dangerous situations, both on and off the road.

IMPROVED SAFETY Safety is improved with the Downhill Cruise Control, which sets a maximum speed to help prevent unwanted acceleration when travelling downhill, and Adaptive Cruise Control (ACC) that now works at all speeds even down to zero km/h.

trucks, conversely, feature exteriors that appear to be upgrades rather than a complete overhaul of the design aesthetic which has served the company well since the turn of the millennium. Packaged together, the tractor heads’ inside and outside share much of the DNA of their predecessors with refinement rather than revolution the order of the day. The changes can wholly be view as quality of life improvements that were needed for drivers. While the new Volvo FM and Volvo FMX have a brand new cab, as well as many of the same instrument display functions as other Volvo counterparts, their interior volume has been increased by up to one cubic meter. This provides better comfort and more working room, says Volvo Trucks, with the visibility much improved thanks to larger windows, a lowered door line and new mirrors. meconstructionnews.com

Other improvements include a steering wheel with a neck tilt function allowing the driving position to be individually adjusted to a greater extent. The lower bed in the sleeper cab is now positioned higher up for better comfort and allows for additional storage space underneath. Helpfully, the day cab has a new 40-liter storage compartment with interior lighting on the back wall. Volvo Trucks claims that the cabs’ reinforced insulation will help shut out cold, heat and noise disturbance, while a sensor-controlled climate unit with a carbon filter promotes good air quality in all conditions. Where there has been significant change is the dashboard and the controls set-up for drivers. This really does look like a break with the past and drivers now have a fully digital instrument display, with a 12-inch screen, to

Many transport companies express a need for greater flexibility when it comes to service contracts”

play with. The focus here has been to make juggling the amount of information modern drivers have to cope with much easier. Within easy reach of the driver, there is an additional nine-inch side display available for secondary functions. As the emphasis for Volvo Trucks is the driver being as focused on the road as much as possible, it is no surprise to see features such as infotainment control, navigation, transport information and camera monitoring are set to one side. This is compensated by allowing many of the functions to be controlled via buttons on the steering wheel, by voice control, or via the touchscreen and display control panel – now that does sound like a generational leap. Volvo Trucks as a brand has an outstanding record in safety features and the new trucks bring the best technology for APRIL 2020

FEATURE

protecting drivers and road users into the new generation, while adding a few more to boot. Adaptive high beam headlights are now loaded onto the Volvo FH and Volvo FH16 (Volvo Trucks is the first truck manufacturer to launch). The system improves safety for all road users by automatically disabling selected segments of the LED high beam when the truck approaches oncoming traffic or another vehicle from behind. The trucks also feature an improved Adaptive Cruise Control (ACC) system for speeds down to 0 km/h and downhill cruise control that automatically activates the wheel brakes when extra brake force is needed to maintain constant downhill speed. The electronically-controlled Brake System (EBS), which is a prerequisite for safety features such as Collision Warning with Emergency Brake and Electronic Stability Control, now comes as standard on the new truck. However, Volvo Dynamic Steering, with the safety systems Lane Keeping Assist and Stability Assist, only remains an option. A road sign recognition system, meanwhile, detects road traffic signs, such as overtaking restrictions, road type and speed limits, and displays them in the new instrument display. The visibility can be improved further by adding a passenger corner camera which provides a complementary view of the side of the truck on the side display, says Volvo Trucks. Volvo Trucks is launching the new generation with a range of fuel options and several types of drivelines will continue to exist in parallel for the foreseeable future. The company notes: “In many markets, the Volvo FH and Volvo FM are available with the Euro 6 compliant gas-powered LNG engine that offers fuel efficiency and performance on par with that of Volvo’s equivalent diesel trucks, but with a far lower climate impact. The gas engine can run on either biogas, which cuts CO2 by up to 100 percent, or natural gas which reduces CO2 emissions by up to 20 percent when compared with Volvo’s equivalent diesel trucks. This relates to emissions from the vehicle during usage, known as tank to wheel. “The new Volvo FH can also be tailored with a new efficient Euro 6 diesel engine, which is included in the I-Save package that enables significant fuel and CO2savings. In long-haul operations for instance, the new Volvo FH with I-Save combines the new D13TC engine with a package of features and can deliver fuel savings up to 7%*.” From a Middle East perspective, there have also been improvements for the Euro 3 and 5 30

APRIL 2020

AN ALL-NEW VOLVO FMX Volvo Trucks says its all new Volvo FMX has an entirely new cab, increased payloads and ‘inno vative’ safet y features.

FACTS ABOUT THE NEW VOLVO FMX • Cabs: Day cab, Low day cab, Low sleeper cab, Sleeper cab, Globetrotter cab, Crew cab. Exterior and interior trim packages for individual design. • A new steering wheel: With a neck tilt option for a more ergonomic driving position. • Engines: Diesel engines are available with different emission standards. • Gear changing system: I-Shift and I-Shift with crawler gears, with software packages for different areas of application. • Lights: Halogen or LED headlamps.

versions with features like Volvo Torque Assist. Volvo Trucks says it is also setting a new level for vehicle uptime by increasing the engine oil drain interval by up to 50%, and introducing an advanced Real Time Monitoring system. Preventative maintenance has become the main driver of fleet management systems over the past decade and Volvo Trucks explains this system will continuously monitor selected uptime-critical components to help predict potential unplanned stops and turn them into planned workshop visits. Real Time Monitoring is available as an option for the Volvo Gold Contract, which has been extended with yet another offer; the Volvo Flexi-Gold Contract. Unlike an offthe-shelf solution, the system means enables the new contract to offer a more flexible payment structure, as it adapts to fluctuating

Our aim is to be our customers’ best business partner by making them even more competitive”

business tue to changes in workload. Volvo Trucks has also introduced the Volvo Uptime Care Contract, which uses connectivity to follow up selected components and real usage of the truck in order to detect wear-and-tear and based on that continuously adapt the service plan. Connectivity also enables Remote Software Download, which means selected software can be downloaded at the customer’s convenience. Volvo Trucks says the Volvo Flexi Gold Contract offers the same coverage as the Volvo Gold Contract, at the same predictable cost, but with much greater flexibility to adapt to changing business needs. The monthly fees vary, thanks to a 40% flexibility span for the estimated yearly mileage. This gives hauliers greater flexibility to adapt their operations to seasonal changes and fluctuating demand. “Many transport companies express a need for greater flexibility when it comes to service contracts. We now have the technology to make dynamic and connected solutions like this possible,” says Thomas Niemeijer, Business Development Manager, Service Contracts, Volvo Trucks. A tougher FMX

Volvo Trucks has launched its all new Volvo FMX with an entirely new cab, increased payloads and innovative safety features. With increased front axle loads of up to 20 tonnes and a 38 tonne bogie, the new Volvo FMX is built for the toughest conditions and most demanding assignments. “Our construction industry customers are facing ever increasing demands to improve in areas such as sustainability, cost efficiency, safety and productivity,” says Roger Alm, President of Volvo Trucks. “With the launch of the new Volvo FMX, we are proving our commitment to supporting these customers by creating robust trucks and innovative services to assist in making their operations easier, safer and more profitable.” The new Volvo FMX is built on an entirely new cab platform, based on Volvo’s long and successful experience of delivering robust and functional construction trucks. “The new Volvo FMX is designed to give a superior combination of agility and durability,” explains Ismail Ovacik, Chief Designer Exterior for Volvo Trucks. “The completely new cab includes a front section with easily replaceable sturdy parts, headlamp protectors and new V-shaped LED headlamps. To make it easy for drivers to enter or exit, meconstructionnews.com

FEATURE

we’ve designed new anti-slip footsteps.” It comes with increased space in the day cab and storage of up to 800 liters. Drivers also get improved visibility thanks to a lowered door line and new rear view mirrors. The visibility can be improved further by adding a camera on the passenger side which provides a complementary view of the side of the truck. The dashboard has more storage space, new colours and a modern cluster. It includes a dynamic 12in high-resolution instrument display with an interface allowing the driver to immediately see relevant information and select between four different screen views, depending on the driving situation. The instrument display comes ready for future updates and connected services. The driver can gain more traction by engaging the differential locks in an easy way, by turning a knob, viewing the traction status on the instrument display at the same time. The new sleeper cab on the new Volvo FMX comes with improved storage possibilities, including a large storage compartment underneath the raised bed and an upper rear storage with LED panels in the compartment dividers. Moving from the seat to the bed is easier than ever with the new slimmer, ergonomically designed I-Shift gear selector, says Volvo Trucks The new Volvo FMX features the heaviest addition to Volvo’s chassis range – a 38-tonne bogie that allows for a Gross Combination Weight (GCW) of up to 150 tonnes. In addition, the front air suspension has been updated, allowing for front axle loads of up to 10 tonnes, or 20 tonnes for double front axles. For trucks with a steered tag or pusher axle, the steering angles have been increased, resulting in better maneuverability and reduced tire wear. All these improvements add up to greater productivity and cost efficiencies for construction transportation tasks. The new Volvo FMX comes with Adaptive Cruise Control (ACC) that now works at all speeds down to zero km/h. Further safety enhancing features on the Volvo FMX include downhill cruise control, which sets a maximum speed to help prevent unwanted acceleration when travelling downhill. The new road sign recognition system increases safety on the Volvo FMX by displaying traffic signs such as speed limits, overtaking restrictions and road type in the instrument display. For particularly rough applications like mining, the Volvo FMX comes with an optional steel roof hatch with an emergency exit handle that removes the entire hatch. The new FMX can carry more meconstructionnews.com

tonnes and manoeuvre more easily, while keeping the driver safe and comfortable.

We now have the technology to make dynamic and connected solutions”

A driver-centric FH16

The new generation of the Volvo FH16 combines new safety features, a driver centric working environment and the latest technologies to give customers enhanced productivity. The new flagship model belongs to Volvo Trucks’ next generation of vehicles designed with the driver in mind. “By combining a powerful 16-litre engine of up to 750 hp, with improved maneuverability, the latest safety technology and greater driver support, the new Volvo FH16 gives superior productivity for the most demanding transport tasks,” says Volvo Trucks. “The Volvo FH16 is a genuine premium product that can handle all the most demanding

RECOGNISING THE SIGNS The Volvo FH16 features the road sign recognition system. The visibility can be impro ved further by the addition of a camera on the passe nger side that provides a view of the side of the truck on the side display.

FACTS ABOUT THE NEW VOLVO FH16 • Cabs: Low sleeper cab, Sleeper cab, Globetrotter cab, Globetrotter XL and Globetrotter XXL. Exterior and interior trim packages for individual design. • Engines: Diesel engines are available with different emissions standards. The D16K with Euro 6 Step D is available with 550 hp/2800 Nm, 650 hp/3150 Nm and 750 hp/3550 Nm. • Gear changing system: I-Shift with software packages for different areas of application.

applications and, at the same time, give customers and drivers the best of everything,” declares Roger Alm, President of Volvo Trucks. “With the new generation we have created a package that makes no compromises between power and fuel efficiency, comfort and style.” “The Volvo FH16 delivers everything you expect from a Volvo truck, and more, thereby solidifying our position as the brand for heavy, demanding long-haul operations,” he adds. The exterior of the new truck is characterised by V-shaped headlamps which feature crystal like effects to reflect the intelligent technology the trucks are built upon. The strong character and heritage of the Volvo FH16 flagship model is enhanced with the waterfall themed grill, while the headlamp panels have been repositioned slightly outwards to give the vehicle both improved aerodynamics and a confident stance. “In the new Volvo FH16 we have reimagined the most iconic design elements from our earlier generations and further enhanced them. With the new high tech headlights, for example, we have taken our strong light identity to the next level, while the entire front of the truck has been reworked to convey a more powerful impression,” explains Ismail Ovacik, Chief Designer Exterior for Volvo Trucks. “Bolder, more sophisticated and confident, the exterior of the Volvo FH16 reflects the fact that this truck is more connected and smarter than ever before,” he says. Increased front-axle load capacity, and tag and pusher axles with better steering angles, improve both the maneuverability and productivity of the new Volvo FH16. A new 38-tonne bogie is also available for especially demanding operations. The new Volvo FH16 features industry first adaptive high beam headlamps that improve safety for all road users by automatically disabling selected segments of the LED high beam when the truck approaches oncoming traffic or another vehicle from behind. The high beam is adjusted when the camera and radar detects other vehicles or when the camera detects changes in the amount of light around the truck. The Electronically controlled Brake System (EBS), which is a prerequisite for safety features such as Collision Warning with Emergency Brake and Electronic Stability Control, now comes as standard on the new truck. Volvo Dynamic Steering, with the safety systems Lane Keeping Assist and Stability Assist, is also available as an option. APRIL 2020

WORKSHOP

JAGUAR LAND ROVER NEW PDC / FPT MAKES POTENZA PURCHASE / SAMOTER SHOW TO COME LATE 2020 / EUT OFFERING FREE TYRE CHECKS

WORKSHOP

Jaguar Land Rover upping parts presence JAGUAR LAND ROVER BEGINS WORK ON NEW 19,000SQM PDC PARTS Construction of new 19,000sqm parts distribution centre (PDC) Jaguar Land Rover in Dubai has begun following a special ground breaking ceremony last month. According to Jaguar Land Rover the PDC will serve customers throughout the Middle East and North Africa (MENA) region. In a statement, the company said that the facility is currently expected to to be operational

during the first quarter of 2021. “This will allow Jaguar Land Rover to meet projected growth in demand for parts and accessories over the next decade and beyond. This demand is driven by an increase in the number of cars joining the region’s roads. The new distribution centre will be located at Dubai’s Jebel Ali Free Zone Authority (JAFZA),” said the company. Jaguar Land Rover’s current site,

JLR IS DIGGING INTO THE REGION The new distribution centre has been developed to keep pace with the projected growth of the market in the years to come, said MD Bruce Robertson.

which has operated a regional aftermarket Parts Distribution Centre in Jebel Ali, Dubai, since 2014, will begin to be phased out from November this year. The current operation serves nine MENA markets but the new development expands storage capacity and could potentially be expanded to 30,000sqm in the future. The added space will allow Jaguar Land Rover to hold and distribute approximately 32,000 part numbers, including branded merchandise from the luxury marque, said the company. Responsible for all inbound, warehousing, scheduling, and distribution tasks, the new facility will streamline the flow of parts to retail partners across the region, enhancing customer service. “This is a key element of our regional expansion plans as we recognise the importance of offering first-class aftersales service, an essential ingredient of which is rapid parts supply,” explained Bruce Robertson, managing director, Jaguar Land Rover MENA.

FPT NABS EV TECH COMPANY ELECTRONICS

FPT Industrial says the acquisition UK company Potenza Technology represents another step in the firm’s path towards electrification, one of the pillars of its multi-power powertrain strategy. The CNH Industrial company is known for the design, production and sale of powertrains for on and off-road vehicles, marine and power generation applications and has made a 100% acquisition of Potenza Technology. Based in Coventry, UK, it has been at the forefront of electric powertrain technology since 1999, with expertise in functional safety engineering, battery management systems, and electronic systems design and development. “Thanks to the sustainability benefits of electrification, the powertrain industry needs to focus on this area to overcome the challenges and make it feasible for all potential applications,” said Annalisa Stupenengo, CEO of FPT Industrial.

INSIDE THIS MONTH’S WORKSHOP: UPDATE ON HOW CHINA’S AUTOMOTIVE INDUSTRY IS DEALING WITH THE CORONAVIRUS, AUTOMECHANIKA, AND MORE!

32 APRIL 2020

meconstructionnews.com

WORKSHOP

EUT AND AUTOPRO OFFER FREE TYRE CHECKS

SAMOTER AND ASPHALTICA RESCHEDULED TO OCTOBER EVENTS

Veronafiere, the organisers of the SaMoTer construction equipment show in Verona, Italy, have announced new dates for the event which was postponed due to the Covid-19 emergency sweeping the country. According to a statement from Veronafiere, the new dates for the event are 21-25 October this year. Originally taking place in March, the event had already been rescheduled to 16-20 May after the initial lockdown of northern Italy following the outbreak of the novel Coronavirus in the region. The event was to take place concurrently with Asphaltica, also organised by Veronafiere, dedicated to the bitumen and road sector, which will now also be held on the same dates. The two events will now share their dates with ICCX Southern Europe, the precast exhibition-conference, and Oil & non-Oil, the energy, fuel and mobility services trade fair. Giovanni Mantovani, CEO of Veronafiere, said: “We continue to monitor the scenario, together with the steering committee involving companies, partners and associations such as Unacea and Siteb which co-organises Asphaltica with us. The new postponement agreed upon is consequently the result of realtime listening to the market and careful assessments. We took into account the need to ensure safety in health terms and safeguard the important investments planned by companies taking part. This unity of intent with stakeholders once again highlights the sector’s confidence in the capacity of the trade fair system to support it and be a tool for relaunching the sector, even in times of great crisis such as those we are currently experiencing.”

meconstructionnews.com

TYRES Emirates for Universal Tyres (EUT), Continental’s UAE distributor, is teaming up with AutoPro, to offer free tyre check campaign for the Emirates’ drivers. At a time of year when drivers face unpredictable weather, resulting in the increased possibility of accidents, the campaign has been introduced to ensure drivers are as safe as possible, the two companies explained in a statement. Each customer will be offered a complete tyre check, which will include tests for air pressure, tyre size, tread depth, wear and punctures. The checks are on offer as part of Autopro’s 10th anniversary. Drivers can stop for he checks between 22nd February and 25th April. “Helping to deliver the safest possible driving environment is a primary focus for both EUT and Continental,” said Shaun Smith,

FREE UNTIL THE END OF APRIL The tyre checks are on offer in Dubai, Sharjah and the Northern Emirates as part of Autopro’s 10th anniversary and will be available until the 25th April.

general manager, EUT. “This campaign is perfectly in keeping with this objective, and we look forward to helping as many of the UAE’s drivers as possible.” Taleb Al Saleh, retail marketing director, ENOC added: “As the operator of the largest network of automotive facilities, AutoPro has a commitment to understanding our customer’s needs and safety. That’s

why we deliver the best quality service. For our tenth anniversary celebration, we are implementing a series of tyre safety campaigns, partnering with Continental Middle East and EUT to make sure that our customers drive away safely and that their tyres are roadworthy.” EUT was recently reappointed as the sole UAE distributor for Continental.

ROLLS-ROYCE REVEALS CORONAVIRUS MEASURES PRODUCTION

Rolls-Royce Motor Cars halted production at the company’s Goodwood-based manufacturing plant on 23 Monday March for an initial two weeks. In order to further secure the health and welfare of the employees of the company this suspension will be followed by an already-planned

two-week Easter maintenance shutdown, said the company. The day-to-day operations of the company was assured by nonproduction employees who will remain at work at the company’s head office on the Goodwood Estate in West Sussex or who will work from home on a rotational basis. Social distancing measures were also

A HARD DECISION TO MAKE Rolls-Royce CEO Torsten Müller-Ötvös says the action was not taken lightly but the company had to protect its workforce.

introduced throughout the company. “This unprecedented action has been taken following the introduction of additional measures by the UK Government to tackle the Covid-19 pandemic,” said the company in a statement. “This action has not been taken lightly, but the health and wellbeing of our exceptional workforce is first and foremost in our minds,” said Torsten Müller-Ötvös, CEO, Rolls-Royce Motor Cars. “We are a tight-knit community at the Home of Rolls Royce and I have no doubt that our resilience will shine through during this extraordinary time.” He continued, “As a deeply customer-focused company we are aware that this decision to pause our production will possibly cause some discomfort or inconvenience to a few of our esteemed patrons, for which we apologise while seeking their understanding at this difficult time.” APRIL 2020 33

FEATURE

AUTOMECHANIKA OPEN FOR BUSINESS

Growth indicators in the automotive industry will drive opportunities in aftermarket sales

n light of the evolving COVID-19 outbreak, UFI (The Global Association of the Exhibition Industry) and SISO (Society of Independent Show Organizers) have launched an industry-wide campaign to show where events are ongoing – and Automechanika Dubai remains one of them. The organiser Messe Frankfurt is therefore (as of the beginning of April) proudly displaying its badge, alongside other events and exhibitions, to state that is going ahead as per schedule, while “continuing to monitor the situation”. The automotive aftermarket’s business prospects have been underlined by a valuation forecast of US$18.5 billion by 2023, and suppliers and manufacturers are now looking to Automechanika Dubai, the largest international trade show for the automotive aftermarket 34 APRIL 2020

and service industry in the MEA region, to predict the areas for industry growth. The three-day trade event hosted over 30,000 visitors and 1,900 exhibitors in 2019, and has established itself as an international meeting point for global and regional players in the automotive industry. The 18th edition of the show will run from 7-9 June at Dubai World Trade Centre (DWTC). The growth was highlighted by global research and analytics firm Aranca – the show’s knowledge partner, which also forecast that aftermarket sales will be supported by an increase in passenger and commercial vehicles in operation, a number set to reach 27 million by 2023. Kamran Siddiqui, a spokesperson for GP Global MAG – a Jebel Ali-based manufacturer of lubricants, fluids and coolants, believes

Increasing need for car ownership across the emerging economies is one of the factors driving demand”

infrastructure development in emerging markets will be a major contributing factor for the increase of vehicles. “Increasing need for car ownership across the population of emerging economies is one of the factors anticipated to drive demand for the automotive aftermarket,” said Siddiqui. “Consumers in developed and developing regions have different mobility needs and continued urbanisation is likely to lead them toward car ownership.” Aranca also identified factors such as an increased use of technology, the rise in popularity of ride hailing apps and a growing regional consumer base as key factors for aftermarket sales in the region. “What is becoming clear is while certain products and services in the aftermarket are being shaken up by innovations within the meconstructionnews.com

FEATURE

AUTOMECHANIKA DUBAI RETURNS Automechanika Dubai is one of 17 instalments of Automechanika – the most successful automotive aftermarket trade fair brand in the world. It is the largest international trade show for the automotive aftermarket and service industry in the MEA region and returns from 7 - 9 June 2020 at Dubai World Trade Centre. The previous edition of the show connected 32,720 visitors with 1,900+ exhibitors showcasing a diverse range of products, equipment and services across 13 halls. Over 8,000 business meetings took place at the show. This strategically located trade hub also offered the opportunity to: Review products and pricing options from 63 exhibiting countries and 23 country pavilions; Negotiate partnerships with key manufacturers including exclusive distribution rights in key markets; Discover product innovations and be prepared for future market demand; Feel the pulse of the market and stay ahead of the competition.

automotive industry, new opportunities are presenting themselves,” said Mahmut Gazi Bilikozen, Show Director for organiser Messe Frankfurt Middle East. “Demand for hybrid and electric vehicles, which has been supported by a raft of new, young consumers who prioritise sustainable and eco-friendly products is also having a dramatic impact on the market which we now see reflected in exhibitor offerings.” With the automotive industry and the government driving to develop standards in vehicle repair in the region, delegates can visit the specialist product sections – Repair & Maintenance and Car Wash, Care & Reconditioning section, for the latest updates. These segments are vital to the professionals in garages, dealerships and workshops, and to fleet managers who use this as a one-stop meconstructionnews.com

THE SHOW TO GO ON As of T&FME going to press, Automechanika Dubai is still set to go ahead.

shop trade platform, says Automechanika Dubai’s organiser Messe Frankfurt. Returning show feature, the Automechanika Academy, will identify and assess challenges and opportunities within the industry. Notable speakers include Nassim Al Mehairi, manager of Statistics Department - Dubai Customs who will provide statistical updates on Dubai’s automotive trade including the total market value of the automotive aftermarket trade in terms import, export and re-export figures. Suzanna Perrier, regional sales leader, EMEA – WABCO will meanwhile will look at how how TRANSICS WABCO can taking fleet management to another level through autonomous driving, digitisation of processes, optimisation and systems’ integration and security and efficiency systems’ connectivity. Andrea Piccin of GRS s.r.l will present the results of Automechanika Dubai’s survey with its visitor audience for the “Market Outlook: Middle East Automotive Aftermarket by 2025”. The results of which will be presented on the first day of the show. Those concerned with whether they have the expertise to fully utilise modern trucks should pop into the Advanced Driver Assistance Systems (ADAS) – From Technology to Repair session presented by Pete Bradley, head of Technical Service & International Training, Hella Gutmann Solutions. This session will introduce ADAS, its impact on the day-today workshop operations and its future as a disruptive technology. It will educate garage professionals on the information, tools and components needed for repair as well as the process for calibration of cameras and radars.

What is becoming clear is certain products and services in the aftermarket are being shaken up”

Likewise, Graham Threlfall, global key account manager, Vehicle Refinishes, AkzoNobel will look at ‘Accident and Repairs in The Electric Age’. The industry veteran and bodyshop expert promises to take us through how the electric car is fundamentally different, the implications on repair and maintenance, and how the customer may interact with repairers and brands. For those looking for solutions for the right here and now, Tiqani founder Rudy George Shukri will present ‘Fix it Right, I Might Come Back. Treat me Right, I will Come Back’. In it, he will look at how regional workshops and garages can retain business and build customer loyalty in the current market environment? In this session, Shukri will share his experiences in customer retention, the influencing factors, building a lean solid process around the customer experience, and more. Finally, the AfriConnections session will be a platform that facilitates networking between buyers and sellers from the African automotive aftermarket. Sandra Engelhard, senior analyst, Light Vehicle Sales Forecasting, IHS Markit, will look at the rise of the light vehicle market in East Africa. “Industry growth in the automotive aftermarket lies with understanding market influences and the application of new technology solutions to meet customer demand,” continued Bilikozen. “We are facing an EV evolution, and the impact of sustainable vehicles will shift how many suppliers and manufacturers approach their businesses. It is our goal to make sure individuals and organisations have the information and skills necessary to cope and thrive during this transition.”

READY TO ROLL The 18th edition of the show will run from 7-9 June at Dubai World Trade Centre (DWTC).

APRIL 2020 35

FEATURE

THE CENTRE OF THE STORM

Mike Smitka of Seeking Alpha looks at the long-term effect on China’s automotive suppliers

hether or not Covid-19 goes global is driving overall market volatility, and auto stocks are down accordingly. However, there has already been an impact on global auto OEMs and Tier I’s, so some decline is justified. Here I provide conservative estimates of the financial losses the industry has already incurred, based on what has already happened in China. Of course, if quarantines extend to auto production regions elsewhere (Daegu in Korea and northern Italy), we could see comparable impacts emerge elsewhere. 36

APRIL 2020

China is the largest economy in the world. Reflecting that, its domestic vehicle market, at 28 million units in CY2018, is one-third larger than either the North American or the European market (each at 21 million units; OICA data). Overall, it accounts for 30% of the global industry. For the auto industry what happens in China matters. A lot. Only in mid-March, did photos from China show people returning to the streets and in subways. Nevertheless, Hubei remains on lockdown (a small relaxing of the rules was made at the end of March to enter but leave the area). However, throughout the major eastern regions of China, those

March is mostly a lost cause, and output reduced in April”

finally able to return from their extended holiday faced two weeks of quarantine. So plants won’t even be able to staff for normal operations until the end of the first week of March, and it will take two to three weeks for output to normalise. For example, while Toyota’s four assembly plants began reopening on 17 February, they are running only one shift, and not always for a full day. That’s just as well, because sales were down 19% in January and 92% in the first two weeks of February. Dealers don’t need additional inventory, and sales will remain depressed. Part will be the anticipated continuation of 20 months of decline meconstructionnews.com

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(presuming February will be a down month, duh). The Chinese Association of Automotive Manufacturing (CAAM) had already predicted a 5% decline for CY2020 prior to the coronavirus outbreak. But it’s also that the small business owners who comprise the core of the market have now lost 5 weeks of income, which will put many out of business. Most have little or no access to formal credit markets, so government monetary easing will do nothing for them. By the end of 2020, the industry will have seen 29 months of falling sales. From the standpoint of epidemiology, the New Years timing was a worst-case scenario. From the perspective of the auto industry, it was a best-case scenario. Why? - because firms build up inventory in advance of the holidays, as over New Years assembly operations shut down across the automotive industry. For producers away from the epicenter in Wuhan, production interruptions will be short-lived and random, as with the “3/11” (March 11, 2011) earthquake and tsunami in northeastern Japan. Then, shortages of a single pigment made meant that certain black paints used in Europe ran out. It was similar with damage to the Tohoku plant of Renesas/ Certain options were unavailable, at Toyota and others, until a replacement plant in Malaysia started deliveries. The impact on sales was trivial: dealerships hold inventories, and could steer customers towards other models, trim packages and colours. Furthermore, over the last 10 years not just the Japanese but the industry in general have improved their visibility into their “just-in-time” supply chains, from materials suppliers to 3rd- and 2nd-tier suppliers. They have used that knowledge to identify vulnerabilities and develop alternate sources and backup inventories. Lean is good, but you do want fat strategically located. (Unfortunately, while the auto industry can do that, all I manage is a spare tire.) A short-run interruption, particularly to one well upstream in the supply chain, may thus never be visible to new car purchasers. OEMs, however, will be plagued with inefficiency, and extra costs to overcome bottlenecks. That will be apparent in China. The Hubei lockdown is now over four weeks old, and does not affect just a handful of suppliers. By chance, as an academic economist in my first year of retirement, I have a research project underway on the geography meconstructionnews.com

I expect the coronavirus to wipe out all Q1 earnings at companies in China”

of the Chinese auto industry. Using 2018 data, Hubei accounted for 17 out of 104 final assembly plants, more than any other single province. Most prominent is Honda, whose three assembly plants are the sole production sites for their best-selling CR-V and Civic (at over 200,000 per year, they have been a large and profitable success). In addition the province is home to plants of GM, PSA, Renault and Nissan. While plants in the rest of China are gradually resuming operations – the photo above should indicate that phrasing may hide more than it reveals! – those in Hubei were scheduled to reopen only from 11 March, six weeks beyond

NETWORK DISRUPTION Hubei is part of the greater Yang tze River Delta, with 17 assembly plants and over 400 supplier plants.

HOW CHINESE MANUFACTURING REACTED In China, production stopped 23 January, as the week-long Chinese (lunar) New Year holiday began on 24 January. Historically this holiday has seen 100 million Chinese migrants return from cities to visit their natal villages. Fortunately, that meant firms built up inventories going into the holiday. Unfortunately, because most of those infected had no or mild symptoms, there was no immediate quarantine. By the time the initial Wuhan lockdown began on 23 January, perhaps 100,000 people had already left the city.

Today, it and the entire surrounding province of Hubei remains in lock-down, affecting 60 million people, including those elsewhere in China who cannot return home. Other parts of the country have regained a semblance of normalcy. The news in China has shifted from reporting new cases to reporting cured cases, and some automotive parts shipments are now reaching Europe. However for automotive, Hubei is part of the greater Yangtze River Delta, with 17 assembly plants (out of the 100+ in China as a whole) and over 400 supplier plants.

their original post-New Years target. Honda noted that while they expect employees to return on the 11th, it will be three days before any production actually resumes. Hubei however is not just a locus of final assembly. It is also integral to the lower Yangtze automotive production network that accounts for half of all Chinese vehicle output. As part of an academic research project, I have so far compiled data on the location of 6,300 electrical, drivetrain and chassis suppliers in China. [Yes, I read Chinese. And Japanese and German.] Of these, 373 or 6% were located in Hubei, and the nature of my data mean that this is an underestimate. Now with 17 assembly plants, some of this is expected. Thus I deliberately left out seating plants from the above total. Why? Iin China as elsewhere, “just-in-time” production means these only supply nearby assembly plants. Whether they operate or not doesn’t affect the auto industry elsewhere. The key issue is that not all the plants focus on customers in Hubei; some export to Asia, Europe and North America. Examples include major global suppliers such as Bosch (privately held) and Magna (MGA). These (alongside Denso) are the 3 largest global Tier I’s. No individual factory is large enough to matter for their overall profits. But lack a seat recliner bracket (one of Bosch’s Hubei products), and you as a Tier I seating supplier aren’t shipping seats, and your customer’s assembly plant shuts down. Supply changes are complex, and a monthplus stoppage in a key production centre will with certainty have global ramifications. [I have fought off my impulse as an unreformed academic to provide a detail-laden list. Rest assured: these aren’t two anecdotes, but two examples from a large dataset. Valeo, Dana, Cummins, Xiangyang (bearings), the list of significant players is long.] Few motor vehicles are exported from China. In 2019 the US only imported 68,573 cars and light trucks, all made at the plants of global OEMs and so their origin is unnoticed by most consumers. European import levels were similar. In contrast exports from the US significant, totaling 192,210 cars and light trucks, such as the BMW Honda Motor Co., Ltd. Stock Analysis & NewsX-series models for which all global production is in South Carolina. Car dealers in the US and Europe won’t be affected, but the February hiatus will knock 10,000 or so units off of exports. Overall the impact on vehicle sales and production APRIL 2020

FEATURE

outside of China is too small to concern investors, absent any future parts shortages. Components are a very different story. The US exported $2.5 billion in automotive parts to China in 2019. One example is Gentex’s autodimming mirrors, found on high-end vehicles globally, all of which are made in Zeeland, Michigan. In contrast, we imported $15.6 billion in parts from China. Now much of that (say, 50%) is for the aftermarket, feeding into the sales of Advance Auto Parts. Autozone and O’Reilly. Their business models rely upon carrying frequently used parts locally. In the aggregate they have a lot of inventory, so we’ll hear of service shops having to reschedule a brake job or oil change until they can get a part shipped in from some other store. Not a big financial hit, since all three will be in the same boat. Or rather, the same boat will have left all three stranded. But then there are those printed circuit boards that lie behind the buttons on the armrests of doors, the gearshifts on consoles, and those for sunroofs and the climate control system. Those come from small suppliers, who depend upon resin suppliers, and guess what? Apple (or rather, Foxconn) can pay double without blinking an eye to see that their vendors get dibs on inventory. Circuit boards are their lifeblood. A Tier III auto supplier has little leeway to pay extra. It will be Webasto (sunroofs) or some similar supplier that will find itself unable to ship product. Again, in the auto industry materials and components are stockpiled in advance of the Chinese New Year. While light-weight parts can be shipped via airfreight, bulk items move on ships. At the fast end, those take 3-4 weeks (source: Transit Times from Shanghai), from the loading of a container at a Chinese factory to its unloading at a firm in the US Midwestern “auto alley” or the EU French-German-Czech-Polish “auto corridor.” But plants don’t necessarily ship containers daily, and other delays mean the norm is about six weeks. In addition, ports in China have been shut, and it will take at least two weeks for them to start regular operations. (At least automotive doesn’t need refrigeration. Produce containers are going to have to be emptied of rotting contents, and thoroughly cleaned, which no one is set up to do.) That means that, in the normal course of events, post-Chinese New Year production would not make it to customers in the US until the first two weeks of March. Furthermore, just-in-time logic means that global suppliers have plants everywhere 38

APRIL 2020

A DROP IN REVENUE Sales were expected to remain down 75% through March in China, and if things go well, only recover to 50% in April.

MANUFACTURERS IN CHINA A few firms stand out (all data are from company financial statements and investor presentations): • VW: 40% of group sales were in China, where it has 15 assembly plants (including a commercial vehicle JV) and an additional 17 parts plants. • GM: 40% of vehicles are sold in China, where CY2019 joint venture sales came to $39 billion. In 2019 they earned $1.123 billion in China, on an equity basis. • Honda: 30% of sales (1.5 million vehicles) are from China, less than the market leaders, but most of their operations (including motorcycles) were in Wuhan. • Adient (NYSE:ADNT): they have 86 manufacturing locations across 41 cities and 21 joint ventures in China; Asia accounted for 58% of CY2019 EBITDA. • Hyundai/Kia: only about 10% direct sales in China, with about 660k vehicles made in their factories there. However, their risk from supply chain issues is higher than any other global OEM.

that their OEM customers have operations – Europe, Southeast Asia, Japan/Korea, North America, Brazil. What happens in the regions adjacent to China should thus give a foretaste of what will happen in Europe and North America at the end of March. Disconcertingly, Korea – with ports within a day’s sail of China – saw frequent interruptions from mid-February, driven by shortages of wire harnesses. This affected all producers there, including Hyundai/Kia and GM’s Daewoo plants. That’s partly driven by the aggressive move into production in China by Kyungshin, its key wire harness maker. It is however only one of some 170 Korean Tier I’s and Tier II’s to set up in northern China, with its good logistics into Korean ports. Japan is only starting to see an impact. Toyota, Nissan and Honda source their wire harnesses

The impact on sales was trivial: dealerships hold inventories, and could steer customers towards other models”

coming from the Philippines, not China, but Nissan Kyushu closed for 3 days and planned 4 days of short hours. Toyota has announced that they may have to curtail operations from March 9th, driven by the inability to ship, which also means that some of their suppliers have yet to resume production because they can’t get parts. The key word is “curtail” - not stop. Even at Hyundai’s plant in Ulsan, where in February a worker was found to have Covid-19, only the assembly line where he worked was shut down. The other 4 lines in the huge complex continue to operate, as key suppliers have increased production outside of China and as at least some deliveries from China have resumed. With the exception of a short-term issue at a Fiat plant in Serbia, North America/ Europe. However, Denso has just announced that their car audio operation in Spain will stop 16 March (Automotive News). That is consistent with the above timeline. Problems based further up in the supply chain (the production of precursors for plastics) may not appear until April. Absent direct effects from quarantines, as in China, the story so far is one of interruptions. That will change if Hubei cannot resume production, and the same will be true of Europe if northern Italy remains quarantined. What does all this mean for revenue and profits? While most plants are open – VW has 14 automotive assembly plants in China, and the last six were scheduled to reopen 24 February – production will be limited until operations normalise in Hubei. Nikkei XTech details major Japanese operations in China, across several industries, consistent with this picture of factories being reopened but operating at half capacity. Currently plants there will be allowed to reopen in the second week of March, but it will take several days to get underway. The effective resumption of operations thus was scheduled for the 3rd week of March, by which time employees who have returned from the provinces will be out of quarantine. But not all are returning. They have the understandable fear that Wuhan will be bad for their health, where many live in dormitories, and most must commute in crowded buses and subways, and eat with others in factory break rooms. In addition, firms didn’t pay workers before holidays. Will a small supplier actually be able to pay them? Even if there are no further quarantines, firms will be understaffed and will only be able to work out of inventories of parts from meconstructionnews.com

FEATURE

before the New Years. March is mostly a lost cause, and output reduced in April. First, even a conservative back-of-theenvelope calculation shows that this is not trivial. China accounts for 30% of global automotive sales for OEMs and Tier I suppliers. China’s strong market, which only slowed in 2018, meant that profits have been higher, so that 30% in sales generated 40% of profits. Hence from the start of the New Years holiday through Friday 21 February, the industry has lost four full weeks of both output and sales (again, with dealerships closed throughout most of the country, sales in the first two weeks of February were down 92%). That is thus 1/3rd of 2020Q1 output and sales. With China 30% of the global sales, that’s a 10% drop in global revenue, and (because automotive fixed costs are high), profits will decline by 15%-20%. That is a conservative estimate because it only reflects what has already happened. Sales, however, will not recover in March. My own (off-the-record) conversations indicate that streets in Chinese cities remain unpopulated; the Shanghai high commuting report shows mostly green (here) while videos show subways largely empty (here, matched by data here). More important, again as noted earlier, small businesses have now lost a 5 weeks revenue: for all intents and purposes China is in a steep recession. Sales will remain down 75% through March, and if things go well, only recover to 50% in April. They were already down 19% in January. So, let’s average January, February and March: (19% + 92% + 75%)/3 = 62% decline for 2020Q1. This more realistic number means the hit to global sales 30%*62% equals 19%. One in five dollars of global revenue isn’t going to be there. China is of outstanding importance for Volkswagen: it is the region with the brand’s highest unit sales. Last year, Volkswagen delivered 3.2 million vehicles to customers in China and is the clear market leader in the world’s largest and most important automobile market. VW Corporate Newsroom Potential vulnerability varies across firms. At the national level, the two market leaders in China are VW and GM, with roughly 17% and a 12% market shares. In the luxury segment, Audi, BMW and Mercedes-Benz are roughly equal, selling roughly 600,000 vehicles assembled in China with additional imports. Then there’s Honda, which has the misfortune to have three of its four plants in Hubei. All of these, however, are joint ventures, so while in good times they only meconstructionnews.com

PROBLEMS IN THE SUPPLY CHAIN Problems based further up in the supply chain may not appear until April.

If quarantines extend to auto production regions elsewhere, we could see comparable impacts emerge elsewhere”

share 50% of the profits, in bad times they suffer only 50% of the losses. (These firms also earn profits from licensing fees, finance, and marketing, which are not through the manufacturing joint ventures and are not detailed. Anywhere. I’ve looked for the past five years.) The other side, though, is that the pure domestic car companies (40% of the market) and components firms enjoy neither the costs nor the benefits of a partner. There has already been a substantial hit from the coronavirus on automotive revenue, at present about 10% of global automotive top-line. China has been a major source of automotive profits. To my knowledge, the only 8-Ks to date are from Aptiv and Tenneco. Aptiv notes up to a $200 decline in revenue and a $50 million drop in earnings, while Tenneco reports a potential

$150 million drop in revenue and $50 drop in earnings. Yes: earnings fall 30¢-40¢ for every $1 loss in revenue. Autos are a high fixed cost industry. Until more reports, are issued, I do not want to extrapolate. I expect the coronavirus to wipe out all Q1 earnings at companies whose primary operations are in China. Publiclytraded assemblers include Beijing Auto Industries, BYD (OTCPK:BYDDF), Geely ,Great Wall, and Guangzhou Automobile (OTCPK:GNZUF). There are also numerous start-ups, and most non-publicly-traded China-based global suppliers such as CATL (batteries), Joyson (airbags, steering gear), Yangfeng, and Wanxiang (diversified). This number will increase the longer the impact lingers in China - I estimate the final tally for 2020Q1 will be 20% of global top-line revenue. However, that assumes that coronavirus effects are limited to China. I do not attempt to incorporate what is happening in northern Italy and Daegu Korea into this analysis. Modest interruptions in Europe, Japan and Korea will wipe out all automotive profits for 2020Q1. It is only the ability to mobilise supply chains in these regions that have kept the negative impact on production outside China to a minimum. Disclosure: Seeking Alpha has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

A SUBSTANTIAL HIT There has already been a substantial hit from the coronavirus on automotive revenue, at present about 10% of global automotive top-line.

APRIL 2020

PARTING SHOT

EXPRESS 2020 DUBAI

RTA trials autonomous vehicle at Expo 2020 Dubai site

ubai’s Roads and Transport Authority (RTA), yesterday, announced that it has started trial runs for an autonomous vehicle at the Expo 2020 Dubai site. The vehicle is used to transport individuals from main entrances to staff offices via a dedicated path. This is in line with RTA’s efforts to broaden the scope of Dubai Self-Driving Transport Strategy, which is aimed at transforming 25 per cent of total mobility journeys in Dubai to self-driving modes by 2030. The strategy contributes to the integration of mass transit as well as safe and sustainable transport solutions, RTA said in a statement. The vehicle is said to use green technologies and is powered by electricity to operate up to 16 hours. It can accommodate 15 riders – 10 seated and 5 standing – and can travel at a speed of 25 km/h. The statement from RTA, said that it is designed

to travel in closed and internal public roads within the entertainment and residential communities. Ahmed Bahrozyan, CEO of Public Transport Agency at RTA, said that the SelfDriving Transport Strategy is part of initiatives aimed to support the green economy drive. “Trialling an autonomous vehicle at the site of Expo complements an achievement and addition to our efforts to spread autonomous vehicles at various Dubai hotspots. The trial run, which will last for three months, includes testing autonomous technologies, ensuring high safety of individuals, and protecting surrounding properties. It illustrates RTA’s keenness to adopting highly efficient, safe and reliable technologies in delivering smart services,” he said. The autonomous vehicle also features high safety and security standards to monitor its path using advanced sensors and high accuracy

positioning systems. The vehicle can monitor an obstructing object, and will automatically slow down when an object emerges, while come to a complete stop when the object comes close to the vehicle. Mohamed Al Ansaari, VP for Communications at Expo 2020 Dubai, said: “We are proud that the site of Expo 2020 has become a venue for the implementation of the Dubai Self-Driving Transport Strategy, with the deployment of a test run of an autonomous vehicle at the site. This strategy is compatible with our sustainability vision to enhance the use of environmentallyfriendly vehicles with low-carbon emissions.” “Teaming up with RTA is an integral part of our practice to work closely with government entities across the UAE. Our ultimate goal is to raise the profile of the UAE as a leading country in sustainability and environmental conservation,” he concluded.

NEXT ISSUE: T&FME TALKS TO FLEETS ABOUT OPERATING IN A COVID-19 WORLD, BRIDGESTONE INSIGHT AND MUCH MORE!

40 APRIL 2020

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Truck&Fleet ME April 2020

Articles inside

COVID-19 STRIKES

GENESIS G80

RENAULT ROLLS ON

THE REGION IS RISING

NEWS FROM THE MONTH

PLANT AND PROGRESS

THE SHOW WILL GO ON