STUTTGART, Germany (Reuters) - Daimler is preparing to expand and upgrade its software services to freight operators, the head of its trucks division said, in a move designed to ensure that big customers stick with its vehicle brands.
After more than a century of earning money by bashing metal, vehicle makers are looking for new revenue from connected services, which can make vehicles safer and more efficient. For large truck fleets, that can mean big savings.
“We’re aiming for a major product drive which goes way beyond what we have right now,” Wolfgang Bernhard said in a recent interview at Daimler Trucks headquarters in Stuttgart.
Daimler will expand the digital business by adding new services while rolling out current U.S. products in Europe and vice-versa, Bernhard said.
The German manufacturer sees digital services boosting vehicle sales rather than becoming a new profit center in their own right.
“I don’t believe (we) will be making big amounts of money,” Bernhard said.
But effective digital tools can significantly improve customer loyalty, he believes, making it harder for large clients to defect to a rival manufacturer.
“You create exit barriers for your customers,” Bernhard said. As a fleet operator running Daimler’s tools, he predicted, “you will be so deep in the web that removing yourself will be a very painful exercise.”
Daimler, German rival Volkswagen (VOWG_p.DE) and Sweden’s Volvo are battling for leadership of the truck market.
Existing Daimler products include Fleetboard, launched in 2000. The software gathers data such as average speed and braking behavior, allowing freight operators to analyze driving styles and ultimately save 10-15 percent on fuel, Daimler says.
The package also includes competitive fuel-efficiency rankings among drivers — which can then be used in job applications or to cut insurance premiums on their vehicles.
U.S. customers use Detroit Connect Virtual Technician to handle maintenance and repairs remotely. The service catches engine faults early and can locate the nearest spare parts. Users reported a 6 percent gain in on-the-road time and a 20 percent cut in repair costs.
Daimler began charging clients to use Fleetboard in 2002 as its use caught on. The software is currently priced between 30 to 100 euros ($32-105) per month per vehicle.
Demand for digital applications has also forced the company to adopt a less hierarchical approach to suppliers and third-party services it may potentially want to offer clients.
“We as Daimler Trucks will not be the kingpin,” Bernhard said. “It is more of a network approach - it’s a completely different mindset.”
Reporting by Laurence Frost; Editing by Keith Weir