How to stay big on a small market
The normal reorganization to be able to survive the crisis in 2009, the more organized sales of the used vehicles, an increased attention towards the additional services like financing, repairs, maintenance, spare parts, offering new services (operational leasing) are only a few measures that Schmitz Cargobull Romania implemented to face this difficult period. About all of these and about the plans for the future we discussed with Mile Misevski, managing director Schmitz Cargobull Romania.
Ziua Cargo: How did the crisis manifested itself in Romania in the market you are activating on?
Mile Misevski: We started to notice problems connected to the crisis in Romania at the end of 2008, especially in the construction segment - the tippers accounted for 30-40% of the total sales volume. In the same time, we had noticed problems also on the international transport segment. A lot of customers had been experiencing problems regarding the delay of payment or debts that there weren't paid, very low transport prices etc. And this had been happening while many of them had had high degree of debts (too many leasing contracts and credits). Consequently, we stopped the orders towards the factory at the end of 2008. Even though we continued to deliver from the stocks in January and February, we noticed a drastic decrease of the number of new orders. At the beginning of the second trimester of 2009, we have reached the anticipated situation - the orders were close to zero, the deliveries ended and the stock contained especially tippers and a smaller number of curtainsiders. This stock wasn't there following our orders to the factory, but because a high number of orders was cancelled. At the end of the first trimester, we didn't have yet stocks resulted from re-possessions from the leasing companies or banks. The measures we adopted allowed us to maintain a normal level of the stocks. Unfortunately, some of our competitors didn't manage such a good situation and, as a consequence, in 2009, the market suffered because of the very big commercial vehicles stocks. The prices decreased greatly, each dealer wanting to get rid of the stocks, and the need for liquidities increased more and more.
How did the crisis reflect in production?
In January this year, compared with January 2008, we noticed a decrease of the activity in some of our factories up to 90-95%. One of the factories even had a negative situation of orders. Practically, there weren't enough vehicles to be produced to cover the minimal costs. Fortunately, we managed to avoid closing the factories and stopping the production. It mattered that Schmitz Cargobull is a big company. We managed to get over the worst moments through reorganization. I'm reminding you the fact that we have 3 factories, in Germany, Spain and Great Britain.
It was a moment when the new vehicles were cheaper than the used ones. How could that happen?
At the end of the second trimester of 2009, the re-possessed vehicles started to appear, from the leasing companies or from the customers who couldn't afford to pay. We are talking about pretty new vehicles, used only for a little while and bought during the full economic development, at high prices. Their numbers were so increased that it created even problems connected to their parking. So, it was a moment when the market was full of almost new vehicles and new vehicles stocks, with almost identical prices. This phenomenon showed at the beginning of the summer and at the beginning of the autumn last year, the consequence being the decrease of the prices for the use vehicles. It should always be a difference of price between the new and the used vehicles, and the prices for the new vehicles reached the lowest possible level.
Did the used vehicles sales increase?
Until 2009, we took into consideration within our reports only the deliveries of new vehicles. Since last year, we started to register all the deliveries. In 2009, we delivered in Romania a little more than 800 vehicles (of which only 300 new), compared to 2,400 units in 2008, of which only 100 were used vehicles.
It's interesting to see that, in the market, the total demand for vehicles didn't decrease as much as the demand for new vehicles. In 2007-2008, we had a period of time when the economy was overheated and we all contributed to that situation, planning increases and ordering too many vehicles from the factories.
It is enough to look at the numbers to notice that 2010 is at the same level as last year, the only difference being the increase the interest for new vehicles. Practically, the market of used vehicles was already emptied, the prices started to go up and the offer for the new vehicles is very attractive.
I have to mention the fact that when I am talking about the level of the market for this year, I don't take into consideration the construction sector, which is very low for the moment.
Do the dealers concentrate on the big companies?
We've always preferred the small and medium transport companies. You can create easier long term relationships with these companies and you can reach that desirable mutual trust. But these are the companies that are most affected by the crisis and they didn't recover yet. Today, they could be customers only for used vehicles. For us, it matters that they are still alive. The big companies who manage 2009 well started to buy also new vehicles, but there is a big pressure on the price. The vehicles suppliers have to find solutions to answer to the transporters' needs, including from the point of view of the acquisition prices.
I want to underline the fact that Schmitz have a product with advantages from the point of view of the total operation costs, because we are offering a lot of additional services, like financing, spare parts, repairs and maintenance etc. In addition, we offer quality products that integrate modern technologies. Unfortunately, last year, the customers were only interested in the acquisition cost.
How the next year will be?
Schmitz Cargobull Romania looks into the future with confidence. We don't have high expectations for this year, but we are happy that the market is stabilizing. The only thing that would bring high increase of sales would be the investment in the construction sector. On the other hand, the measures the Government announced have already a negative impact and the transporters are more careful. This hesitation of the hauliers to invest represents the main reason for the low level of the sales. There are already requests for new products, like the operational leasing, and we are flexible and we offer the clients what they need. More and more Romanian companies apply for operational leasing.
Regarding the European market, the trend is on increase and the next year will be better. For Romania, the market in 2011 will depend greatly on the political decisions of this year. Generally speaking, I am optimistic regarding the Romanian market, which has a great potential.
Radu BORCESCU
radu.borcescu@ziuacargo.ro
Publicat in revista Ziua Cargo din June 2010
