…Volvo DAF, MAN, Iveco restrategize to regain market
By AYOOLA OLAOLUWA
For over fifty years, Daimler (Mercedes), Volvo, DAF, MAN Diesel and Iveco controlled the Nigerian heavy trucks market, virtually unchallenged. Between them, they accounted for more than 95percent trucks deployed in the Nigerian haulage market.
However, their domination of the nation’s trucking business has witnessed serious competition in the last two years from a Nigerian upstart, DangoteSinotruck.
Threatened by Dangote Trucks, the major brands have now fallen behind, barely controlling 45percent of the trucks in circulation, Business Hallmark finding can reveal.
Dangote’s quest to take over the Nigerian heavy trucks market began in 2013, when he signed a deal with Chinese heavy duty truck company, Sinotruck, for the supply of 1,700 heavy trucks and 1,700 semi-trailers to expand its distribution network.
Not satisfied, he partnered with the same Sinotruck in 2017 to set up a $100 million plant to assemble trucks and cars in Nigeria for local use and export. DangoteSinotruk is controlled by Dangote Industries, with 65 percent equity, while the company’s Chinese partner Sinotruk owns 35 percent.
But beyond the hype and enormous publicity that trailed the launching of DangoteSinotrucks, and the roll out of the first trucks in mid 2018, the company has performed beyond the expectations of many industry watchers.
BH checks show that DangoteSinotruck is actually taking over the trucking industry from Daimler, Volvo, DAF, MAN Diesel, Iveco, as well as Hyundai and Daewoo, which entered the Nigerian market in the 90’s.
Checks revealed that several construction and haulage companies operating in the country, particularly local firms, are daily embracing Dangote trucks. Our correspondent gathered that several factors are responsible for the acceptability of Dangote brand of trucks by the Nigerian market.
They include lower price per unit, after sales service, available parts and lower maintenance cost, among several others. Another factor is the prevalence of Chinese construction companies operating in the country.
According to AskTheTrucker, a United States based trucking outfit, on average, a brand-new truck costs about $113,000 and a sleeper about $125,000. On top of this, new trailers usually add an extra $50,000, particularly if one is looking for a standard rig. This cost is outside the shipment and clearing cost.
BH reached out to some distributors of the foreign brands in Lagos posing as a potential buyer. According to BH checks, the cost of a Dangote-Sinotruck truck is relatively cheaper than its peers in the market. For example, while a brand new M.A.N. TGX XLX 6X2 (2013-2019) used in the construction industry (with a trailer) cost between N55m and N67.5, a brand new IVECO STRALIS HI-WAY 460 EURO 5, 6 X 2 TRACTOR UNIT – 2013 – 2018 (without a trailer) goes for between N25 and N40m.
The cost of a unit of Mercedes (Daimler), Volvo and DAF also goes from between N35 and N60m, depending on the brand and specifications. Meanwhile, a Sinotruk 2019 goes for only N22, 500,000 in Lagos.
Apart from lower prices, the delivery time for Dangote Sinotruck trucks are quite fast. For the after-sale service, customers do not need to order from abroad and wait endlessly before getting spare parts.
According to Dangote Sinotruk Westafrica Ltd, the company has enough stock and professional mechanic to cater for customers needs.
“At the same time, we also offer the warranty service for 6 months or 30,000 kilometers (which comes first). It is comprehensive and timely”, the company said.
Though the company had an initial installed capacity to assemble and produce 15 –16 trucks per shift or 10,000 trucks annually, it has initiated a process to increase its local input into the assembling plant to up to 60 percent and plans to roll out commercial vehicles soon.
The expansion drive, which the company says is part of its backward integration plan, is meant to enhance value addition and local content.
“The company has the plan to have welding and painting shops to fabricate and paint truck cabin and Trailers of different type so as to enhance local content of Completely Knocked Down (CKD) operation of commercial vehicle Manufacturing,” said the Group General Manager of the Company, Hikmat Thapa, during a visit to the Ikeja plant in Lagos.
He said having done with the phase one of the project, the Company has embarked on the phase two which has to do with adding of the facility for Cab welding, Painting & Trimming.
He added that the third phase of the project expansion would be to add the facility that would be used to fabricate, Paint and Assemble different types of Trailer bodies, load bodies with dual & triple axles, Tipper bodies & tankers and so on.
“In next one year, we have on our agenda to assemble and fabricate Truck Cabins, different type of trailers, Tipper bodies and Tankers etc. in our plant to increase value additions up 40 – 60 percent.”
The automobile company said it hopes to expand sales to all the neighbouring West African States saying “we are targeting to sell our products to ECOWAS countries in addition to fulfilling local market requirement.”
The company is established to assemble and produce full range of commercial vehicles covering heavy duty truck, medium truck, light truck and other semi-trailers.
Apart from players in the construction and haulage industry who are currently benefiting from the partnership between Dangote and Sinotuck, the Dangote Group itself, according to BH findings, is a major beneficiary.
Although Dangote Group said the objectives of establishing Dangote Sinotruk West Africa Limited is to provide employment opportunities to Nigerians, improve local automobile industry, add equipment base and achieve technological advancement in Nigeria, there is more.
If the group was ordering 1,700 units of heavy trucks from Sinotruk like it did in 2013, it would be paying $78.2 million, 78.2 percent of what it invested to own 65 percent of the new company which has the capacity to produce the trucks Dangote Group needs.
The Executive Director of Dangote Group, Edwin Devakumar, said that the $100m plant is expected to meet an expected increased demand for transport in the country as the government focuses on boosting agriculture and farmers need to move goods across the vast country.
“The Dangote Group has a fleet size of 12,000 trucks and large users. One of the biggest challenges in the market today is logistics because we do not have a proper transport network.
“The joint venture, which is 65 per cent owned by Dangote and 35 per cent by Sinotruck, will assemble components and knocked down parts imported from Sinotruck to the Nigerian plant.”
Another factor that is aiding the dominance of DangoteSinotruck in Nigeria is the large presence of Chinese companies in the country. Most of the companies, patronize their own local brands against Western European and American brands.
While some Chinese firms still shipped in their trucks from China, many others have resorted to patronizing Dangote for their trucking needs, giving the truck manufacturing company an edge in the competitive haulage industry.
BH gathered that several foreign construction companies are gradually embracing the Nigeria-Chinese product to cut cost in the ever cost rising Nigerian market.