Face to face with VW’s Roberto Cortes

Each month, CHARLEEN CLARKE goes face to face with one of the captains of the transport industry. This month, she chats to Roberto Cortes, CEO of Volkswagen Caminhões e Ônibus

After a long recession, the Brazilian market started to recover in 2017. Brazilian vehicle manufacturers went on to record robust growth in bus and truck sales in 2018. And you’ve experienced more of the same in 2019. In the first 11 months of 2019, the truck market grew by 18 percent while the bus market grew by 13,7 percent. How has Volkswagen Caminhões e Ônibus fared? I see Mercedes-Benz has pipped you to the market share post. This cannot be a situation that you enjoy?

We have maintained our market share of 27 or 28 percent. We give priority to financial results; this is far more important to us than market share – we focus first on profitability and customer satisfaction.

For sure, nobody likes to lose ground or market share – and the same applies to our company, but losing one or two points of market share is not the end of the world. We need to operate profitably. It’s also important to bear in mind that we have to fund our investments; we are completely self-funding.

Speaking of investments, the big news (and a major investment) is your continent’s first electric city delivery truck, the e-Delivery, which will roll off the assembly line in 2020. You must be very proud of this development?

Yes, we are. It is the first 100-percent electric light truck in Latin America with zero CO₂ emissions. Volkswagen Caminhões e Ônibus’ global development centre, headquartered in Brazil, investigated and applied the best solutions available in the world and locally to satisfy our customers’ needs for low emission vehicles that can run in emerging countries. The e-trucks and the e-Consortium to produce them form part of a R$1,5 billion (R5,27 billion) investment.

I believe that Ambev Brewery – owner of brands such as Skol, Brahma, Antarctica and Guaraná – has already placed an order for these trucks. Is there interest from other companies, too?

Ambev will acquire 1 600 of these trucks by 2023. This is the world’s largest order for e-trucks. Around 50 other customers have already registered their interest in the electric variant of the city delivery truck.

I’m assuming that you’re trying to make these e-trucks comparative with the price of a diesel truck when it comes to the total cost of ownership (TCO), correct?

Yes. Right now, the e-trucks are fairly expensive. However, initial price is one thing. We know that TCO is important and we believe that they can compare favourably to diesel trucks. Energy costs drop by 70 percent with the electric trucks and maintenance costs drop by 50 percent. We are also considering a rental scheme for the e-trucks – so the customer won’t have to worry about the initial purchase price.

We visited your factory in Resende some years ago and we were impressed at the way that it works. We have yet to see another factory like it – where suppliers share the responsibility for assembling the vehicles with your company. You refer to an e-Consortium for production of the e-trucks. Will it work in a similar way?

Yes. The e-Consortium will operate in the same fashion. The advantages of our production concept include lower fixed costs and ensure profitability even at comparatively low utilisation rates. Production can be adapted more flexibly in response to differing market developments that are common in Brazil. It’s the ideal factory concept for emerging markets because the equity ratio is lower, so target returns can be achieved more quickly than in conventional factories.

The e-Consortium will cover all aspects of electric vehicle manufacture and operations, from developing components locally to setting up the infrastructure needed to produce them, covering the entire useful life cycle of the vehicles, including disposal of the batteries at the end of their lives.

The e-Consortium partners and suppliers include Siemens, which provides the charging infrastructure and equipment, and supplies electrical energy to clients; CATL and Moura are responsible for distribution, management and maintenance of the battery packs; and Bosch, WEG and Semcon are responsible for developing and supplying components.

We were the first company to demonstrate and test an electric-powered truck in Brazil under real operating conditions. And now, with the worldwide announcement of the e-Consortium business model, we are joining forces with companies that are leading the way in developing electric mobility.

Could you sell these electric trucks in South Africa?

South Africa is a priority market for us. We are producing the Constellation in Pinetown together with our MAN colleagues. Our objective is to offer new buses and trucks to the South African market. For now, we don’t have right-hand drive e-Delivery models. We are, however, analysing the market.

You’re achieving only single-digit monthly sales for the Constellation in South Africa. This must be a very disappointing situation for you?

Our main target is to provide the right truck for each market in which we compete. That’s why we are a leader in Brazil and in most other markets in which we compete.

We are working hard to understand and meet the needs of South African transport operators. For sure we are not happy with the current volumes in South Africa. If we are one of the biggest volume producers in 30 markets, why don’t we have the same situation in South Africa? We are working hard to change this situation.

Until recently, we were depending a lot on Brazil. With the crisis, we realised that we could not rely on our home market. We are putting a lot of money into the development of new products for markets other than Brazil. Export markets – including South Africa – are very important to us.

Finally, what has Traton meant to Volkswagen Caminhões e Ônibus?

We are living in a world that requires a lot more transformation than in the past. We have to think about electrification, autonomous driving, connectivity and digitisation – to name but a few things.

Operating alone, we would be way behind when it comes to those technologies. By being part of Traton, we have access to all these new technologies overnight. There are lots of synergies with MAN and Scania that can be explored. Without these synergies, we would risk our future – because we would come with new technologies, but only much later.