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18.08.2014
MARCOPOLO: THE QUEST FOR GLOBAL LEADERSHIP
Professor Charles Dhanaraj
and Professors Fernanda
Ribeiro and Eva Stal prepared
this case as a basis for class
discussion rather than to
illustrate either effective or
ineffective handling of a
business situation.
José Rubens de La Rosa, CEO of the Brazilian bus manufacturing
company Marcopolo, was on his way to attend the company’s board
meeting. The 2013 financial results and the company’s growth strategy
were on the agenda. Brazil was getting ready to host two of the
world’s biggest sports events: the World Cup in 2014 and the Summer
Olympics in 2016. Unfortunately, populist demonstrations against the
Brazilian government’s decision to increase bus fares from 3 Reals
(~US$1.22) to 3.20 Reals (~US$1.30) was spreading around the
country. This had a substantive impact in its 2013 domestic revenue.
Overall industry growth was small to flat in most developed markets.
Marcopolo was facing a tough competitive environment even outside
Brazil. Chinese firms such as Yutong and King Long, both market
leaders, were aggressively entering Europe and the Americas.
European companies, Daimler and Fiat continued their aggressive
marketing leveraging several Asian partners. Volvo, which had been a
leader within the industry, was slowing down. For the third year in a
row, revenues in the bus division of Volvo had declined, and the
division registered losses for 2013.
Over the past two years, de la Rosa had been articulating Marcopolo’s
global growth strategy emphasizing its goal to be “the #1 or #2 in each
of the Marcopolo’s market.” Two recent acquisitions of Marcopolo
had signaled its growth ambition in no uncertain terms: US$116
million to buy 20% stake in New Flyer, a Winnipeg, Canada based
company, and a market leader in bus business in North America, and
US$ 47 million to buy 75% stake in Volgren, Australia’s largest bus
body manufacturer. Ruben Bisi, Chief Strategy Officer, and a member
of the Executive Board, summed up management’s challenges:
We have to grow, but we need to decide whether we should focus on
emerging markets or mature markets. In mature markets, we have
stability but the growth is very low. In emerging markets, there is
high unpredictability in growth with volatile currency. We don't see
potential acquisition targets in emerging markets and they need
substantive investment to develop these markets. We also need people
and good partners.
Copyright © 2014 by IMD, Lausanne, Switzerland (www.imd.org). No part of this publication may be reproduced,
stored in a retrieval system or transmitted in any form or by any means without the permission of IMD.
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Marcopolo: The Growth of a Market Leader
Marcopolo was the largest Brazilian manufacturer of bus bodies, with an annual production
of 30,000 buses, and 55% of its production was outside Brazil (refer to Exhibits 1 and 2 for
Marcopolo’s global footprint). The company designed, manufactured and assembled coach
buses, urban buses, microbuses and minibuses.
Paulo Bellini founded the company along with six other young mechanics in 1949. The
company started with 15 employees, under the name Nicola & Cia. Initially it focused on
plated and painted cabins for trucks in the southern Brazilian city of Caxias do Sul, state of
Rio Grande do Sul. Settled by Italian immigrants in Brazil’s southernmost state, this city
abounded in small-scale manufacturing enterprises. The first order came from a local
commuter bus line, and Nicola built the body on a truck chassis. The first bus body was
produced in wood, and it took 90 days to fully assemble it. Bellini recalled, “It was all trial
and error at first and everything was handmade.”
In 1952 the company produced the first steel structure bus bodies, a technological leap that
gave the company headway in the Brazilian market. In 1968 it launched the “Marcopolo”
model, a sales hit in the São Paulo Automobile Salon. The innovative design and the
sophisticated manufacturing techniques led most customers to associate the brand with an
Italian origin. In 1971, supported by the results of market research, management renamed the
company Marcopolo S.A. Buses and Parts. In 1992 the company formally changed its name
to Marcopolo S.A. Over the following decade, Marcopolo systematically expanded its
production and marketing base across the globe (refer to Exhibit 3). As of 2013 the company
held approximately 7% of the world market and had over 18,000 employees.
The Global Bus Industry
Buses are ubiquitous in most places and have been used for wide ranging purposes. From the
school bus for children that operate only in the weekday mornings and evenings to transit
systems that operate round-the-clock, from feeder shuttles at the airport terminals that take
passengers from the gate to the airplane to intercity buses used for long distance travel, from
company buses used for luxury travel for short and long distances to specialized buses that
transform to mobile hospitals or musical studios, the use of buses have been very diverse.
Global production of buses reached almost 342,000 units in 2012 and the lead markets were
China (169,000 units), India (53,000 units) and Brazil (37,000 units). From 2005 to 2012 the
industry grew at an annual rate of 4%, and much of the growth came from the Asia Pacific
region, especially China.
Exhibit xx provides an overview of the value chain in the bus transportation industry. Bus
body builders generally focused on local markets. Analysts estimated that a smart
entrepreneur could set up a simple bus body-building unit with a capital outlay of US$ 1
million. The chassis assembly comprised the main structural frame that supported the bus,
and the drive components, engine, transmission, and the brake and steering systems. Body
builders typically designed, fabricated the body frames, provided the exterior with windows
and doors, and the interior with seating, electronics, and toilets, where appropriate.
Customers tended to have different combinations of the critical factors for their purchase:
Safety, passenger comfort, design elegance, costs, delivery time, financing, energy
consumption, maintenance, and ease of operation. For example, public transit companies,
which generally bought buses in large numbers (50-500) and corporate buyers and private
transit companies, which bought coaches in small numbers (1-10) had very different criteria.
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Bus manufacturers in the industry came under three categories: integral manufacturers, body
manufacturers, and chassis manufacturers. While the integral manufacturers (e.g. Fiat,
Daimler, Volvo) built entire buses including chassis, engines and bus bodies, body
manufacturers (e.g. Yutong, Marcopolo) built the bodies and assembled the buses, and
chassis manufacturers (Scania) built the structural frames for buses. It was not uncommon to
see manufacturers compete in some geographic markets and collaborate in others.
In 2012, according to the International Organization of Motor Vehicle Manufacturers
(OICA), Marcopolo was fifth among the top six bus companies in the world: Zhengzhou
Yutong Bus (1st), Xiamen King Long (2nd), Fiat, (3rd) Daimler (4th) and Ashok Leyland (6th).
Together these companies accounted for about 45% of global bus sales (refer to Exhibit 4).
The integrated manufacturers were highly internationalized and dominated the global bus
market. Daimler (Mercedes and Setra brands) and MAN (Volkswagen Group) from
Germany, Volvo and Scania from Sweden, Fiat and Iveco from Italy, and Renault from
France were the leaders. However, since the 1990s players from major emerging economies
had been carving out a substantive share in this market.
Yutong and King Long had respectively 25% and 20% of the large Chinese domestic market.
Both had a growing export sales, while Yutong was just beginning to export CKDs and King
Long had an overseas sales of 26% in 2012. Intense market consolidation within China had
brought down the total number of bus producers from over 100 in 2005 to 10 in 2012.
Ashok Leyland, from India, had more experience in international markets than its Chinese
competitors. The company owned production plants in the UK (75.1% controlling stake in
Optare plc), Czech Republic, Sri Lanka and the United Arab Emirates. It was the leader in
neighboring countries, Sri Lanka and Bangladesh.
Brazil had a vibrant bus industry. Many analysts attributed the lack of interstate rail lines in
Brazil to the rapid development of bus transportation throughout the country. According to
the National Land Transportation Agency (ANTT), bus companies were transporting more
than 140 million people every year within the country on interstate trips. Domestic producers
dominated the industry in Brazil. Marcopolo, Ciferal (partly owned by Marcopolo), Caio
Induscar (the second largest company in Brazil and a national market leader for urban
buses), Irizar and Mascarello (formerly Comil) dominated the market. Daimler, Volvo and
Scania manufactured chassis and engines and partnered with Brazilian bodywork
manufacturers. Marcopolo also owned 33% of Neobus, but the two competed in the local
market.
Emerging Challenges
While in the early years bus travel was seen from a functional perspective, where safety and
timeliness were the dominant criteria for the customers, increasingly many other factors were
emerging to define the customer expectations. Many global trends were significantly shaping
the industry landscape. In some parts of the world, customers were resorting to the use of
bicycles for short distance bus travel, facilitated by the municipality’s active encouragement
for cyclists by providing specialized lanes. In other parts, long distance bus travel was
increasingly coming under threats by low cost air travel. Volvo and Daimler had undertaken
systematic studies in assessing global trends that could potentially affect the transportation
industry, and their conclusions converged on five core areas, as below.
Population growth and Urbanization By 2050, the population of the earth was expected to
exceed nine billion and two-thirds of them were expected to be living in cities. Asia and
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Africa were seeing the sharp rise in the number of megacities, populations exceeding 10
million. One-fifth of the world’s population was expected to live in cities with populations
in excess of two million inhabitants by 2015, calling for effective transportation solutions.
Constant Communication Increasingly customers expected the real-time connectivity as a
necessity. As more and more information, private music and entertainment, and payment
systems were becoming mobile, connectivity was seen as a necessity even in intra city
travels. Travel time was becoming browsing time for keeping up on emails or even reading
electronic books.
Climate Change Climate change was increasingly seen as a single most complex and
difficult challenges. Fossil fuel was being seen as a large source of greenhouse-gas
emissions responsible for climate change. The alternative to fossil fuels was necessary but
whether it needed to be a flexifuels or elecrtromobility was still a debate.
Sustainability of the Planet Population growth, a rapidly growing middle class and
increased purchasing power threatens the sustainability of the consumption patterns. Most
industry players recognized that efficient use of resources and recovery of a greater
proportion of material was increasingly important.
Safety and Security Traffic safety was becoming a very important transportation issue. It
had to transcend the usual norms of safety issues as prevention of accidents to potentially
withstanding crime, terrorism and natural disasters. The safety of the driver, vehicle and
passengers was getting a lot more attention.
Industry Innovation
Alongside competitive changes and consolidation within the industry, technological
innovation was also changing the public transit system. Leading industry players focused
their research and development (R&D) efforts on alternative fuel technologies such as hybrid
and electrical. New generations of buses should be lighter, more fuel-efficient, easier to
maintain and safer. Innovation was a way of competing with low-cost producers. Many of
the new technologies incorporated in the buses improved passenger comfort, such as better
lighting, heating, Wi-Fi, electrical outlets for each seat, wider and softer seats, wider aisles,
drop tables/desks, televisions/DVD’s and other amenities. Driver ergonomics also saw
important innovations.
Volvo had launched a hybrid vehicle that combined electric and diesel power, first in
London in 2009 and subsequently throughout the UK. Navistar was experimenting with
another version of a hybrid school bus in the US in collaboration with the US Department of
Energy. Volvo was also testing new marketing approaches with city administrations, a major
bus customer segment, by offering project financing that included buyback of old buses.
These approaches required sophisticated systems analysis of the total impact of the fleet,
including environmental and safety assessments, which suggested a gradual shift away from
product oriented selling to more complex service oriented selling. Bisi noted:
Over the last 20 years what really made the difference [in the industry] was that large
traditional companies have bought other companies and expanded worldwide. There are no
more manufacturers of just bus bodies, as in old times. Abroad, our competitors are our former
partners, including Scania, Volvo, Mercedes and Iveco, who all entered the full bus market.
These big companies tried to displace the independent producers like Marcopolo in Europe,
and they have succeeded. They provide financing and an after-sales network, and they buy
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back used buses. We cannot compete in the European market. Globally, our main competitors
are the Chinese. They have very low production costs (35%-40% cheaper) and also very low
R&D costs. But, for us, the risk of operating in China is high.
Buses, which were traditionally seen as a “dirty and ugly” transportation mode was getting a
makeover with the introduction of what is dubbed as a “bus rapid transit” (BRT) system.
First introduced in Brazil, BRT has been redefining the nature of bus travel, and was
addressing the customer needs as well as emerging as a sustainable and economic solution
for resolving city congestion. See Exhibit 6, to get an overview of the benefits of BRT in
one city in Brazil, namely, Curitiba. Despite the lower capacity limits, BRTs have been
chosen over subways and light rail transit, for their flexibility, lower capital costs, and speed
of implementation.
Emerging market players, particularly those from China and India, were subjected to less
rigorous regulatory environments in their home markets and predominantly focused on lowcost strategies. However, with globalization opening up opportunities in the west,
competitive demands were forcing them to invest in product and process innovations.
Increasingly, the buying process for buses was moving from product oriented to systems
oriented purchases. Many cities were paying increasing attention to public transit systems to
reduce traffic jams, increase road-safety and improve air quality. For example, the US
Department of Transportation was experimenting with several new technologies under a
program called “Automated Public Transit Systems” by incorporating information
technologies to manage fleets, such as automatic vehicle location, communications systems,
traveler information and electronic payment. Volvo was offering its customers a complete
integrated transit management system, where the buses were just one component, albeit a
significant one.
Competitive Advantage
For an emerging market company like Marcopolo, building a competitive advantage in the
global industry required a lot of technological learning to catch up in its first years and then
continuous efforts to improve its capabilities. Companies such as Daimler, Volvo, or Fiat had
a long history in bus transportation industry and many of them have the chassis production as
well. Marcopolo had to build new advantages to surpass these players. From the early days,
the company built a reputation for responding to customers quickly and successfully. Bellini
recalled the early days:
We could make special seats; give the customer a bigger or smaller luggage rack, or fruit racks
for buses in farm towns, leather or plastic seats – whatever the customer wanted. Our rivals
were arrogant with customers, setting the price and the style and telling them, “take it or leave
it.” We went out with our shirtsleeves up, looking for customers everywhere.
The competitive advantage was mainly supported by three features: innovation and
customization, flexible organizational culture, and a global value chain.
1. Innovation and Customization
Innovation played a prominent role in Marcopolo’s history. It was the first company to
assemble bus bodies with a steel structure, replacing wood, in 1952. In 1984 in Brazil it
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launched the concept of a bus taller than the standard at the time, the “floor and a half” bus
(known as “low-driver”). In 1996 it released the double-decker bus, initially for the
Argentinean market, and was the only player in this segment for three years. And over the
years, it developed several other types of urban buses in different sizes.
In 2005 the company adopted the modular concept in bus production, a significant
innovation. The system eliminated welding by fixing bus bodies to the chassis using screws.
In addition to improving the quality and durability of the product, it also allowed it to reduce
time in the engineering project, thereby increasing productivity by 10%, facilitating part
replacements and maintenance, and lowering repair costs.
Customization thus brought unique global competitive advantages compared to the general
practice of standardized products adopted by most bus producers in developed countries,
which stemmed from a lower demand for standard products in emerging markets. One
example of Marcopolo’s versatility was its operation in Middle East countries where it made
convertible buses for pilgrims traveling to Mecca, with gutters for draining rain water and
moisture-resistant upholstery. It also produced buses with partitions to separate men and
women in India.
By early 2000s, Marcopolo had built capabilities to serve a wide range of clients’ needs with
highly customized buses that allowed a broad range of choices for all components: doors,
windows, roofs or the internal decoration of a bus; and the assembled bus bodies could be
built on any type of chassis. Marcopolo’s sixteen plants (4 in Brazil and 12 overseas) each
had a dedicated R&D team that designed buses to meet the specific needs of customers.
In 2012, Marcopolo launched its “Innovation Center” at its headquarters to lead its
innovation with more complex projects. As competitors began copying solutions and
components developed by Marcopolo, it started applying for patents. In the ten years
between 2004 and 2013, it had accumulated over 100 patents. As Bellini noted:
There is currently no other manufacturer in the world with bus lines as diverse – from
minibuses and microbuses up to double-deckers or bi-articulated buses, to normal and adapted
coach buses. Marcopolo does not buy technology. It develops it internally, except for
machinery and processes in the public domain.
Bisi added:
If we have to make something that we have never done before, we will. The challenge for
Marcopolo is to develop more and more technologies for modular bus assembly, to facilitate
and speed up production, without losing our main feature, customization.
In the US and Canada we are learning new technologies. In India we work with Tata and they
develop some ideas, but we cannot implement these in Brazil, because here our partners –
Volvo, Scania and Mercedes – develop their own (as they also make the engines). Each market
has specificities and each partner has a different technology. We seek to adapt ourselves,
because it is necessary to respect the partners in each country.
2. Organizational Culture
Another aspect that was crucial to Marcopolo’s competitive position in the global market
was its organizational culture based on ethical and supportive values and on a strong
commitment to the organization and its partners. According to Bisi:
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When the company went public in 1978, stricter governance practices were adopted as required
by the stock market. That’s when we turned from a family organization into a professional
company. Growing out of a small town of Italian immigrants, firm executives were encouraged
to feel more like “owners” than the real proprietors. It is a culture of strong commitment of all
employees, and we invest in people.
Marcopolo’s acquisition strategies, joint-ventures and technology licensing have allowed it
to access a variety of complementary assets within the global bus industry value chain.
Combined with in-house intensive R&D investments, they had succeeded in
institutionalizing mechanisms for assimilating new organizational, technological and market
capabilities.
This culture also means “to grow with partners” in the joint ventures that we created. It is in the
company’s DNA and we take it to all countries in which we operate. [....] We never quarrel
with any partner. In Russia, we had conflicts and ended a first partnership, but it was
consensual and we remained friends. We manage this consensus, which we call “DNA of
good.” This is not a company that goes somewhere just to exploit and make money; on the
contrary, we work together with our partners, for the growth of both.
Working with local partners had benefitted Marcopolo in many ways. For example, when
Marcopolo entered India in 2005, through a 50:50 joint venture with the Tata group, it was
relatively unknown brand within India. Over the years, the partnership had worked for
mutual benefits. Tata, which had a strong presence in the trucks could leverage its chassis
technology with Marcopolo’s body building capability. As of 2013, Marcopolo was a well
recognized brand within India, and were able to get superior price for their luxurious and
comfortable coaches. Tata Marcopolo was building its largest and highly automated
fabrication plant in Darward, India, with an installed capacity of 30000 units per year.
Marcopolo’s investments in New Flyer, Canada and Volgren, Australia had similar effects in
the respective countries. By partnering with the lead players within the country, Marcopolo
was able to gain a strong foothold in the market and leverage its technological advantage in
local markets with its partners.
3. Manufacturing and Global Supply Chain
Buses were manufactured at Marcopolo’s 16 plants: four in Brazil (two in Rio Grande do
Sul, one in Rio de Janeiro, and a 33% stake in the company San Marino Bus and Implements
Ltd., also in Rio Grande do Sul), and 12 overseas (one in South Africa, three in Australia,
and associates/affiliates in Argentina (2), Colombia, Egypt, India (2), Mexico and an auto
parts factory for bus bodies in China).
Marcopolo was also investing heavily in the component business. It held a 40% stake in
SPHEROS, specializing in cooling and air-conditioning systems, 30% in Woodbridge group
of Canada for manufacturing foams for seats, 26.0% in MVC, a Brazilian leader in the
development of products and solutions in engineering plastics. Many of these operations
were nested within the Caixas do Sul manufacturing facility, which provided the company
flexibility and control on the component procurement.
The organization and management of a global logistics structure with the ability to provide
maintenance services anywhere in the world within 36 hours of receiving a request is a
critical advantage for its international operations. Bisi noted:
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Marcopolo makes “tailor made” products. This is our main strength, but other companies also
adapt products to serve customers. In our case, we backed up customization with other features
that make a difference between us and our competitors: own design, product and process
projects (in our Innovation Center), vertical production (seats, windows, doors, through jointventures in Caxias do Sul with manufacturers of air conditioning, electronics, foam, etc.), and
the lowest “lead time” in the world. Thus, we customize with low investment. The adoption of
Japanese practices such as kanban and just-in-time in 1986 made a big difference. […] On a
single platform we assemble several products; we can build a road bus in eight days. In Europe
it takes 30-35 days and in the US New Flyer takes 40 days.”
The main competitiveness factor is to be aligned with the end consumers’ demands. We
motivate our customers (the bus buyers) to adopt innovations that will make them more
competitive against short airplane trips (Wi-Fi, entertainment, air conditioning), and to better
serve the final costumer.
The Globalization Journey
Marcopolo’s internationalization journey was marked by three distinct phases (refer to
Exhibit 6 for an overview of Marcopolo’s international operations). In the first phase it
began exporting buses from Brazil, then it established factories in neighboring Latin
American countries and in Portugal, a culturally close country. In the second phase it
pursued large markets for buses. As of 2001 Marcopolo built facilities in South Africa,
Russia, India and Egypt. This phase was also marked by the onset of a global sourcing
strategy, such as a component manufacturing plant in 2005 in China. In the third phase the
company entered developed countries – Australia, United States and Canada.
Phase I: Learning to Internationalize in Neighboring Countries
Until the late 1990s the company’s strategy was to produce bus bodies on chassis made by
different manufacturers, to supply the domestic market and to export to nearby countries.
Marcopolo’s internationalization journey began with exports to nearby countries such as
Uruguay, Argentina, Peru and Chile. There was a high degree of vertical integration and the
company had direct control over its main suppliers (materials, seats, doors, plastic
components, etc.). About 80% of the components were made in Brazil and exported to the
branches. Brazil was a large distribution center for all of Marcopolo’s subsidiaries.Bisi
noted:
Located in Caxias do Sul, the company is closer to Uruguay than to São Paulo, therefore we
started exports to that country in 1961, followed by Paraguay, Argentina and Chile. In 1973 we
acquired expertise with the CKD process (an easier way to export), and expanded exports to
other Latin American countries – Venezuela, Mexico, Colombia – and to Africa. In Colombia
we received an invitation from Volvo to assemble buses on their chassis for the Bogotá
TransMilenio project, a novelty in urban transportation systems.
Despite having started exporting in 1961, “the decision to set up subsidiaries abroad was not
a part of the company’s strategy until the end of the 1980s,” recalled Bisi. The Brazilian
market was large and public policies protected domestic manufacturers against foreign
competitors. At that time, exporting had an additional purpose: to reduce idle assets in times
of lower domestic demand. In the early 1990s Brazil implemented pro-market reforms,
which basically eliminated the differences between local and foreign capital and exposed
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domestic firms to international competition. These reforms marked the beginning of
Marcopolo’s internationalization through foreign direct investment (FDI). The company
engaged in acquisitions and partnerships with foreign players in neighboring countries in
Latin America and in Portugal. Bisi noted:
Europe had been identified as an important target because we thought the world would be
divided into common markets, and it would be difficult to enter in the future. Hence, we
acquired a company in Portugal in 1991, to set up a base in Europe, and to get information on
the technologies used by bus companies. As of 2000, our strategic planning defined the need to
be in the BRICS, and we started knocking on the door of potential partners. Therefore, in some
countries it was a planned strategy, in others it was an opportunity – as an invitation from a
chassis manufacturer partner.
In Portugal, the plant’s main role was to collect information on technological developments
in the European bus body industry. Establishing plants in Mexico, Argentina and Colombia
were quite similar experiences. Although Brazilian and Latin American bus markets were
significant, the instabilities of the international economy and strong competition, especially
on price, encouraged the company to seek new markets.
Phase II: Rethinking the Internationalization Strategy
As of 2000 Marcopolo decided to redesign its internationalization strategy. It embraced
international markets actively and focused on two fronts. One was to settle in highly
populated, low-income countries (such as South Africa, Russia, India, Egypt and China)
where buses were the main urban means of transportation. The second was a global value
chain strategy that consisted in outsourcing parts and components globally in order to
produce them at the lowest cost.
Until 2004 Marcopolo produced almost 80% of the components and parts needed to
assemble the buses – seats, windows, dashboards and trunks – in Brazil. However, with the
appreciation of the Brazilian currency (Real) in 2005, other emerging countries became more
competitive in this global industry. Marcopolo saw its exports decrease and it lost the Middle
East market, which represented US$40 million/year, to low-cost Chinese manufacturers.
As of 2005, Marcopolo started building its local sourcing strategy. By 2009 it reached 80%
in Colombia and 50% in Mexico, whereas in South Africa components were imported from
the Chinese plant it had opened in 2005. As a part of its global value chain strategy,
Marcopolo was not only sourcing parts and components globally but also having the buses
produced abroad by strategic partners. For example, India, one of largest markets for buses,
was a target for such a strategy, as described by Bisi:
The strategic plan of 2010 showed India as the second world largest market for buses. The
main means of transportation is trains. There are 60 thousand km of railways, but it is
saturated. There was a great opportunity for road transport, because the government was
planning the construction of a 10,000 km highway system for the population of 1.2 billion.
We wanted to be in India, so we approached Ashok Leyland, the second company in the
industry, regarding a partnership, but we could not agree on royalties. We then knocked on the
door of Tata Motors, which had expertise in manufacturing cheap quality products. Tata
Marcopolo Motors Ltd. (TMML) was created, and this joint venture could not have been better.
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Tata is an ethical and reliable company and we learned how to make a low-cost product. I
believe that India will be a worldwide basis to produce at low cost, cheaper than China.
The Indian bus market is twice as large as the Brazilian and consumes 45,000 units per year,
but the government protects local factories through high import taxes, approximately 30%,
which is the main reason for this joint venture. Tata Motors produces 22,000 units/year and
holds a 49% market share. It has a 51% stake in the new company.
China represented a big opportunity as it was the biggest bus market in the world. Chinese
companies were competing aggressively in the global bus industry through low-cost
manufacturing, and cheaper buses represented a major source of competition for Marcopolo
in overseas markets. It was important to be in China and to stay close to the Chinese market
trends. However, producing buses in China was not easy and involved too many risks, which
Marcopolo was not willing to take. The company chose to open a parts and components
business in 2005. As Bisi explained:
Volvo invited Marcopolo to enter the Chinese market back in 1986, but we did not accept.
Other Chinese companies have approached us, offering partnership, but so far we have not
considered. Almost all of our competitors have had failures in China. The production structure
is difficult – the foreign company must have a Chinese partner, and experience shows that
foreign companies that have accepted, including Embraer, were systematically copied or
stolen.
Marcopolo entered China to transfer technology to a joint venture between Iveco and
Changzhou Bus Company (CBC) between 2001 and 2010. The contract prohibited us from
having our own bus body manufacturing or to export to China during that period. After sorting
out a few problems with the joint venture, Marcopolo created Auto Components Co. Ltd., by
hiring some of those executives. The company acts as a basis for procurement and R&D (some
things are being developed there, because it’s very cheap) and supplies some of the factories
(Russia, Egypt) with armchairs, raw materials, etc. It also exports CKD to Thailand and
Singapore, but it does not sell anything in China.
Besides India and China, the biggest bus markets in the world, Marcopolo targeted other
overpopulated countries such as South Africa, Russia, Egypt and some Latin American
countries to start or intensify production operations.
According to Bisi “going to Egypt was already planned, but a partner made us an invitation.”
In 2008 Marcopolo formed a joint venture with local company GB Auto S.A.E. (Polo GB
Bus Manufacturing Company S.A.E.), where Marcopolo held 49% and GB 51%, with a total
investment of $50 million over three years. The plant capacity was 2,000 units per year.
However, there were plans to expand it, aiming at orders from Kenya, Dubai, Saudi Arabia,
Jordan and Abu Dhabi. Free trade agreements with several countries including NAFTA, the
European Union, Persian Gulf countries (Kuwait, Iraq, Bahrain, Oman, Qatar, Saudi Arabia
and U.A.E.) were another advantage of this location. In South Africa, the market was fueled
by imported products, with no local competition, thus representing a big opportunity for a
Marcopolo factory, which was established in 2001.
Phase III: Entering Developed Countries
In 2010, Marcopolo announced its intention to strategically pursue its global expansion in
developed countries. Bisi noted:
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Our strategic plan of 2010 had an “attractiveness map” of all countries in the world with seven
indicators (economics, political stability, number and quality of competitors, potential of bus
consumption, etc.), which generated a competitiveness guide for Marcopolo in the various
countries. According to this map, entering the US and Canada was motivated by the stability,
governance and economic status of these countries as well as a stable and predictable demand
for buses, a mature market and revenue in dollars. Due to a previous contract with Mexican
Dina (1992), we knew the American market. And we had another contract with Stewart &
Stevenson for selling minibuses.
In these two countries there is a “product liability,” which holds manufacturers, distributors,
suppliers and retailers responsible for the injuries the products may cause, but the market is
very attractive.
Marcopolo entered the Australian market in February 2012 by creating Marcopolo Australia
Holdings Pty Ltd., which sells coach buses under the Brazilian brand in the Australian
market (the school bus “Audace” was the first product sold in the country, imported from
Brazil). In 2011, it acquired 75% of the company Volgren for AUD 53 million ($47
million), and the company was renamed “Pologren Australia Holdings Pty Ltd.” Volgren
was the largest bus body manufacturer in Australia, with more than 40% market share, and
employing around 600 people. It had four plants, specialized in urban buses and held the
technology for making bus bodies entirely out of aluminum, which reduced weight and was
totally recyclable. According to Rubens de la Rosa:
The goal is to launch world-class products with technologies that are different and
complementary to the current line of Volgren, in order to further strengthen our presence in the
region and offer new options to customers [...] Marcopolo Australia will have a commercial
and after-sales structure independent from Volgren, for assistance all over the country.
In January 2013, Marcopolo acquired 19.99% of New Flyer, the Canadian company
headquartered in Winnipeg and the leading manufacturer of urban buses in Canada and the
US. With the strategic investment of Marcopolo, New Flyer acquired North American Bus
Industries (NABI) in June 2013, which opened up a US-based manufacturing operations, a
service center and the aftermarket parts distribution business. As Rubens de la Rosa pointed
out:
This investment is aligned with Marcopolo’s growth strategy and sets its definitive entry into
the US and Canada, two of the most sophisticated and advanced markets in the world.
Technology is important, but it was not what made us decide to go there. In the US we are
entering the market of new models for urban road buses (and also with Marcopolo brand). We
are also working with new technologies from the US and Canada, such as hybrid, gas and
electric buses, which New Flyer is leading.
[...] It was a strategic investment, well planned. In all countries, Marcopolo wants to be the first
or second company, not third or fourth. We looked for Canadian New Flyer, the market leader,
to buy a share of stocks, and with that money it bought American NABI. And we want to make
investments in other companies there. Yet in Australia it was an opportunity, shareholders
wanted to sell the company Volgren.
- 12 -
IMD-7-1606
Challenges for the Future
Despite the success of Marcopolo’s global expansion, Bisi was aware of the challenges
ahead. The Brazilian economy had stalled for some years. After an impressive growth of
7.5% in 2010, GDP growth had fallen below 3% for the subsequent years, and the domestic
economy was not showing immediate signs of recovery. Many expected the country to go
into a recession. The global market seemed to be the most appropriate ground for the
company to grow, but it had to compete with established players from developed countries
(Volvo, Ford, etc.) on the one hand, and large Chinese players on the other. Finally, the
industry itself was going through a dramatic shift. Increasingly buyers were becoming more
sophisticated and the “bus body” itself was becoming part of a larger transit system that
included fleet management systems and other sophisticated information technology devices.
Also, alternative fuels and solar energy were becoming a significant part of the commuter
bus landscape.
Managing Risks in Domestic and International Operations
Brazil, Marcopolo’s home country, had the sixth highest GDP in the world behind the US,
China, Japan, Germany and France.1 In the general automotive industry it was the 7th
producer and it was 4th in terms of domestic market.2 Important global players such as Iveco,
MAN Truck and Bus, Mercedes-Benz, Volvo and Scania had production plants for
manufacturing buses in Brazil. Since 1990 Brazil had been under a democratic regime and
had undergone significant pro-market reforms. However, similar to other emerging markets,
Brazil’s domestic business environment was challenging, with political unpredictability and
even fear of reform reversals.
According to Ruben Bisi:
Even in Brazil the challenge is enormous. Who would have guessed that protests would take
the country last year? Because of them, the local governments are afraid to raise public
transportation fares, and the companies are not buying any buses. BNDES 3 has no more
money. There are serious market regulatory issues. The important thing is that we have the
advantage of being in several countries. While one goes bad, the other is doing well.
The risks are unpredictable. For example, with the American crisis, banks in Russia ran up
huge debts in foreign currency and had no more resources to finance bus acquisition for the
companies. The government gave millions of dollars for the companies to pay their debts, but
the country went broke. Our factory in Russia was taking off but then came the Crimea crisis.
Mexico stopped growing with the American crisis of 2008 but is now improving. Later it was
the Arab Spring. Then came the uprisings against the government in Egypt. Argentina and
India are also in crisis. Our goal is to anticipate these economic and political torments, but
often they are not easy to predict.
1
World Development Indicators database. “Gross Domestic Product 2013. World Bank, 2014.
http://databank.worldbank.org/data/download/GDP.pdf (accessed 18 August 2014).
2
Brazilian Automotive Industry Yearbook, 2014. http://www.virapagina.com.br/anfavea2014/#I
(accessed 18 August 2014).
3
BNDES is the National Bank for Economic and Social Development.
- 13 -
IMD-7-1606
Building Capability to Compete with Global Giants
Marcopolo was pursuing global leadership, focusing on innovative buses and, contrary to
traditional automotive global players, it was a globally-focused bus body maker.
Volkswagen, Fiat, Mercedes-Benz and other traditional global leaders in the bus industry
were diversified and produced cars, vans, commercial vehicles; in most cases buses were not
the biggest part of their total production. Marcopolo integrated the global operations and
competed to stay among the top six global players in the bus industry by focusing on what it
really did best.
The industry’s “traditional players” are also going to emerging countries – Mercedes is in
India, Volvo in Mexico and China. These markets will continue to grow. We exceeded them
because we customize our product. They have a cheaper standard product, but when the client
needs customization, he comes to us.
In the past we had investments in other segments. We were members of Caraíba Metals and
even owned a bank. And we have thought of getting into various sectors related to our industry.
But we have decided to focus on what we really do best. I believe that in the near future we
will not abandon this focus. At least, not in the next five years.
Changing Technological Landscape
Technological trends in buses followed closely the emerging trends in passenger cars. On the
one hand, customers demanded high fuel efficiency and adoption of alternative fuel
technologies such as electric, hydrogen and ethanol, on the other hand they also wanted more
luxury and capacity for real-time information processing. Wi-fi and geopositioning sensors
were increasingly becoming a standard option in buses. Cities and large fleet owners were
investing in fleet management systems, which helped to advance the optimal use of buses,
fuel and drivers, thereby enhancing real-time scheduling capability. Sustainability was
becoming the overriding concern for most customers. Bisi remarked:
By the end of 2014 our new strategic plan for the period 2015-2020 will be ready, and
sustainability is one of our concerns. And the company’s Innovation Center is already working
with digital manufacturing and remote personal training. Regarding sustainability, the more
sophisticated our product is, the more recyclable it becomes. We have goals to increase
recycling, reduce the weight of the final product and also make the production process cleaner.
One challenge is to displace passengers from planes. For large trips the airplane is unbeatable,
but on arriving at the airport, the bus is needed to take the passengers to the city. And also on
short trips. Hence, there is complementarity. Other challenges are to further reduce the lead
time, the cost of the product and fuel consumption, “lobbying” for legislation to use more
sustainable alternative fuels. Also to assemble the bus closer to the customer (therefore,
expanding internationalization), and to increase the use of minibuses instead of the unsafe vans
used in cities. And to continue to increase customization.
Our capacity and credibility are in bus manufacturing. Our shareholders would charge us for
diversifying our businesses. They invest in Marcopolo for its success in making buses and they
expect it to be the best company in the industry. We have to listen to the messages that
shareholders send. And deliver the growth and the profitability they look for. Over the past
decade we have tripled our top line revenue and more than quadrupled our profitability. We
need to focus on a strategy that will exceed this in the next decade.
- 14 -
Exhibit 1
Marcopolo’s Global Operations
Source: Company reports
IMD-7-1609
- 15 -
IMD-7-1609
Exhibit 2
Marcopolo Financials
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
1.16
1,562,472
1.96
1,863,562
36,4
1.67
1,812,393
35,9
1.76
1,773,836
27,1
1.99
1,182,335
29,8
1.84
1,091,424
31,6
1.95
1,206,856
38,7
2.18
819,726
42,2
2.42
730,766
46,9
2.92
606,951
55,5
1,233,370
1,461,004
1,413,374
1,363,391
932,058
860,468
978,936
650,764
607,876
491,062
Gross Profit
329,102
402,558
399,019
410,445
250,277
230,956
227,919
168,962
122,890
115,889
Other operating expenses
171,156
216,128
173,025
198,875
167,001
134,372
148,337
106,224
87,920
71,818
Earnings before Income and Taxes
157,946
186,431
225,994
211,571
83,276
96,585
79,583
62,738
34,971
44,071
Profit before tax
166,631
199,762
266,817
262,133
109,960
79,950
106,007
80,189
49,428
40,554
Net income
123,275
146,477
185,078
175,418
78,455
57,549
74,722
56,547
35,214
32,040
Exchange rate: USD/BRL
Operating revenue (Turnover)
% Overseas Sales
COGS
Assets
Current assets
1,078,073
1,092,052
1,234,583
1,180,610
959,202
732,292
841,510
543,910
444,195
347,858
Fixed assets
680,185
622,577
584,403
616,306
472,794
310,018
314,474
129,717
111,430
98,857
Total Assets
1,758,258
1,714,629
1,818,986
1,796,916
1,431,996
1,042,310
1,155,984
673,628
555,625
446,715
Shareholders Equity
654,992
640,748
625,212
566,960
416,021
292,573
334,678
237,482
198,338
161,263
Non-current liabilities
652,703
343,139
482,958
667,243
525,419
271,214
310,951
172,255
145,877
83,292
Current Liabilities
450,563
730,742
710,816
562,714
490,556
478,524
510,355
263,891
211,410
202,160
1,758,258
1,714,629
1,818,986
1,796,916
1,431,996
1,042,310
1,155,984
673,628
555,625
446,715
2.39
1.49
1.74
2.1
1.96
1.53
1.65
2.06
2.1
1.72
Profit margin (%)
10.67
10.72
14.72
14.78
9.3
7.33
8.78
9.78
6.76
6.68
ROE using P/L before tax (%)
25.44
31.18
42.68
46.24
26.43
27.33
31.67
33.77
24.92
25.15
ROCE using P/L before tax (%)
15.61
24.43
27.96
27.52
16.26
30.12
27.38
36.48
30.59
33.94
Price earning ratio (x)
9.81
11.94
5.72
6.56
6.86
3.27
7.56
6.84
4.92
5.61
Number of employees
21,002
20,508
21,993
20,393
18,303
11,861
n.a.
n.a.
n.a.
n.a.
Total shareholder funds
Current ratio
Source: Company´s annual reports
- 16 -
IMD-7-1606
Exhibit 3
Evolution of Marcopolo’s Total Production of Bus Bodies by Country (Units)
Country
2005
2006
2007
2008
2009
2010
2011
2012
2013
Brazil
10.838
10.575
14.103
16.635
13.672
18.900
19.046
19.483
21.000
3.200
2.898
2.595
3.214
1.510
1.255
1.234
1.571
1.800
224
190
188
165
54
-
-
-
-
-
-
-
567
470
723
1.298
1.494
1.600
South
Africa
300
314
485
560
308
416
240
244
300
Colombia
947
847
712
765
638
736
1.614
1.600
Russia *
-
-
15
175
8
-
-
-
-
India
-
-
-
-
2.517
5.216
6.308
7.759
9.500
Egypt
-
-
-
-
207
334
213
250
500
Australia
-
-
-
-
-
-
-
435
500
Mexico
Portugal
Argentina
1.049
Source: Company´s annual reports, 2013
* Partnership started in November/2007 and completed in 2009. New partnership in September 2011,
but production only started in 2013; CKD kits exported from China
- 17 -
IMD-7-1606
Exhibit 4
Value Chain in the Bus Transportation Industry
Raw Materials
Raw
Component
Manufactuers
System Builders
Engine
Transmission
Axles
Fuel Systems
Tires
Brake Systems
Windows
Door Systems
Seats
Lighting
Semifinished
Wifi
Sensors
Bus OEMs
Fleet Operations
Fleet
Owners &
Operators
Chassis
Builders
Bus
OEMs
Transit
Planning &
Construction
Body/Interior
Builders
Electronics & IT Systems
Aftermarket remanufacturing
Cleaning Systems
Traffic
Management/
Control
- 18 -
IMD-7-1606
Exhibit 5
Top 15 Bus Makers in the World
Country of origin and the total number of buses produced in 2012 (units), and the share of
buses in total production as percent (given in brackets).
China
57,711 (100%)
China
41,775 (53.4%)
Italy
40,819 (1.9%)
Germany
31,384 (1.4%)
Brazil
30,442 (100%)
India
25,443 (21.6%)
Germany
22,170 (0.2%)
Sweden
20,295 (7%)
India
17,60 (1.4%)
Korea
15,470 (0.2%)
Philippines
15,403 (3.2%)
China
14,919 (1.3%)
USA
10,688 (0.1%)
Japan
5,972 (0.1%)
USA
11,366 (13.6%)
Source: Compiled by authors; OICA, 2012; Companies’ annual reports
- 19 -
IMD-7-1606
Exhibit 6
Global Competitors in the Bus Industry
Company
Zhengzhou
Yutong Group
(CHINA)



Xiamen
King Long
(CHINA)

Fiat Industrial
41,000



Daimler
31000




Ashok Leyland
(India)




Volkswagen
Group
(Germany)



Salient Points
Founded in 1993. In 2002 Yutong and MAN established a joint venture: The Lions Bus
Co., Ltd. Leading producer of large, medium and light buses in Chin
Exports CKD kits to countries like Cuba, Venezuela, Russia, Iran, Saudi Arabia, Hong
Kong. Received EU approval in 2012, and started selling to France, Norway, Israel,
Macedonia. Entered the US market in 2012.
R&D facility based in China and the company’s annual R&D investments account for
3% of its income. In 2008 it started a scientific research institute, which specially
focuses on experimental technology for buses.
King Long has its own R&D and testing institution approved by the Chinese
Government, such as Corporate Technical Centre, Postdoctoral Scientific Research
Workstation, as well as Safety & Energy-Saving Testing Centre. Currently offers 5
series of products, which are subdivided into 50-plus categories. It is investing in
electric bus technologies, dominated in China by Yutong.
In 2011 Fiat Industrial was formed, incorporating CNH Industrial (Case and New
Holland), Iveco and FPT Industrial (Fiat Powertrain Technologies).
Iveco owns 22 production plants worldwide: in Europe, China, Russia, Australia,
Africa, Argentina and Brazil.
In 2011 expenditure on R&D totaled approximately $288 million, 3.2% of Iveco’s
revenue. R&D activities involve some 5,000 specialized personnel at 51 centers.
Iveco boasts a selection of low environmental impact engines.
Brands including Mercedes-Benz Buses, Freightliner, Thomas Built Buses, Setra,
Mitsubishi Fuso Truck and Bus Corporation.
Integral bus production in Germany and Turkey, and chassis production in Spain and
Brazil. It also has manufacturing bases around the world, such as France and Argentina,
and in Japan with a 89.29% stake in Mitsubishi Fuso Truck and Bus Corporation. In
Mexico, Mercedes-Benz has 26% shares of Marcopolo’s Polomex
Daimler buses invested $313 million in R&D in 2012 (5.1% of revenue). The company
is developing environmentally friendly and economical drive concepts: natural gas
buses have been tried and tested and also the promising technology of fuel cell drive.
The Hinduja Group (a global conglomerate company headquartered in UK) bought
Ashok Leyland in 1987. 50/50 JV with Continental AG (that also includes Siemens
VDO) is for the design, development and adaptation of Infotronic products and services
for the transportation sector.
It has production plants in UK (75.1% controlling stake in Optare plc), Czech Republic,
Siri Lanka, and United Arab Emirates. The company is leader in the bus markets of Sri
Lanka, Bangladesh and Mauritius and has significant presence in the Middle East and
Africa.
Ashok Leyland invested $59 million in 2011 (2,2% of total sales). The buses are set to
feature a new electronic shift-by-wire transmission technology as well as electroniccontrolled engine for fuel efficiency.
In 2008 announced low-floored iBus, including anti-lock braking system, electronic
engine management and passenger info-entertainment. iBus also has hybrid technology.
In 2011, Volkswagen acquired 53.7% of MAN SE. MAN Truck & Bus is the largest
subsidiary of the MAN SE and one of the leading international producers of commercial
vehicles and buses.
Besides Germany, MAN Truck & Bus has production plants in India, Poland, Turkey,
South Africa, Russia and Austria. It also has production partners in Brazil, China and
Mexico. In 2011, MAN generated record revenue of €16.5 billion, of which a
particularly large contribution was made by MAN Latin America (25%). Europe is the
region where MAN earned its highest revenue (57%).
MAN Truck & Bus invested around $1,740 million in 2012. The development focus at
MAN is on cutting emissions, consumption reduction, alternative drives and fuels.
Source: Compiled by authors; OICA, 2012; Companies’ annual reports
- 20 -
IMD-7-1606
Exhibit 7
Bus Rapid Transit: An Example of BRT implementation in Curitiba, Brazil
Curitiba is a city of about 1.7 million people in Brazil, and its bus rapid transit (BRT) has
been touted as a neighborhood-friendly, cost-, energy-, and time-efficient. Comparison of
costs per mile of transportation are shown below. Compared to rail, BRT may have to
face the problem of image. BRT's other disadvantage is that it has less carrying capacity
than metro and commuter rail; it has comparable capacity to light rail. For example, a
light rail system may run a 500-passenger train every 10 minutes, while a BRT system
may run a 200-passenger bus every four minutes to provide the same amount of service.
Cost Per Mile (US$ in Millions)
Capital Cost Per Mile of Transportation
100
90
80
70
60
50
40
30
20
10
0
90
34,79
13,49
8,97
0,68
Subway
Light rail transit
(LRT)
BRT (Dedicated Bus on HOV lanes Bus on Arterial
lanes)
Mode of Transportation
Since the implementation of the BRT system, travel time throughout the city has lowered, pollution
has dropped, and total street congestion has decreased.
 Speed Dedicated lanes keep the bus system independent of congestion. Traffic lights can be
delayed for oncoming buses, reducing the time between stops. Elevated boarding platforms allow
for quicker entry and exit to the bus. Fares are pre-paid, reducing waiting at bus stops.
 Connectivity BRT routes are organized generally into rings, expanding further into the outer
reaches of the city. Busses are color coordinated to make it easy for riders to distinguish between
different rings/routes. Curitiba is a great example
of efficiency of the BRT system, as embarking
and disembarking times have been reduced by
one-eighth of their original time.

Comfort The speed, reliability, bus stop
locations and environmental friendliness of the
BRT system have caused many middle- and
upper-class people to begin using it. A real time
location information is used to alert the
passengers if the bus is running on time.

Usage The Bus Rapid Transit system is the most
widely used form of transportation in Curitiba, used by approximately 75% of travelers. BRT
stops function as destination points for commercial activities such as shopping and social
activities, and as catalysts for building and rebuilding surrounding communities and business
sectors. High levels of ridership leave the roads relatively unclogged.
- 21 -
IMD-7-1606
Exhibit 8
Marcopolo’s Internationalization Strategy
Phase I
Country
Entry
Mode
Portugal
1991
Acquisition
1992
Licensing
Dina
Dina Autobuses
1999
Greenfield
Polomex
Daimler-Chrysler
1997
Greenfield
Marocopolo Latinoamerica
2008
Acquisition
Marcopolo
Metalpar
Metalpar (33%)
Colombia
2000
Joint
Venture
Superpolo
Fanalca (50%)
South
Africa
2001
Acquisition
Marcopolo South Africa
2005
JV
Russian Buses
2011
Contract JV
Marco
2001
Licensing
Mexico
Argentina
Phase II
Russia
China
2005
India
2006
Egypt
2008
Phase III
2012
Australia
2012
Greenfield
Joint
Venture
Joint
Venture
Greenfield
Acquisition
U.S.A.
2012
Joint
Venture*
Canada
2013
Acquisition
Brand
Partners
Eurobus (66%)
Tata Marcopolo Motors
Ltd. (TMML)
GB Polo Bus
Manufacturing
Marcopolo Australia
Pologren Australia
Neostar
New Flyer
Source: Compiled by authors from the companies’ annual reports
Acquired by opportunity, Eurobus was seeking a partner. Later Marcopolo
got 100% of the company. Due to economic crisis it was closed in 2009.
Dina supplied chassis and Marcopolo transferred the assembly technology,
parts and components. Contract ended in 1998.
Marcopolo set a greenfield, of which Mercedes Benz later acquired 26%.
Closed in 2001
Ruspromauto (50%)
OJSC Kamaz (50%)
CBC/Iveco
Auto Components Co.
Relevant Facts
Auto parts
Tata (51%)
GB Auto SAE (51%)
Volgren (25%)
In 2012 Metalpar bought 51% of Metalsur Bodyworks. Marcopolo 50%;
Metalsur 25.5%
JV was a big opportunity, as Fanalca sells buses to several LA countries;
Bogota Transmilenio project orders 20-40 buses per month
Marcopolo acquired the Volvo plant in Johannesburg.
In 2010 it provided 460 coach buses for the Soccer World Cup
Obsolescence of local fleet was the attractive factor – estimated demand of
14,000 buses. JV terminated in December 2009.
JV between PoloAutoRus LLC and OJSC KAMAZ Group, the largest car
company in Russia
Contract ended in 2010.
Exports CKD to Thailand and Singapore and supplies Russia and Egypt
factories with components
Production started in 2007, in the Tata plant at Lucknow. A second plant
opened in 2009 in Dharwad
Marcopolo was invited to form the JV. Produces luxury buses for tourism
and microbuses for urban transport. Political instability is a problem
Sells coach buses under the Brazilian brand.
Marcopolo will acquire the remaining 25% within 3 years.
Volgren is the largest bus body manufacturer in Australia, with over 40%
market share
San Marino Bus and
Implements / Navistar Inc.
San Marino (associated to Marcopolo) will increase its portfolio and expand
internationally.
Navistar owns IC Bus, the world’s largest manufacturer of school buses
New Flyer (20%)
This acquisition enabled N.F. to purchase North American NABI
- 22 -
IMD-7-1606
Exhibit 9
Competitive Data: Financials of Daimler (Bus Division)
Figures in millions Euros, except for ratios and units
Exchange rate USD/EUR
EBIT
Revenue
Return on sales (in %)
Investment in property, plant and equipment
Research and development expenditure
Production (units)
Sales (units)
Employees (as of December 31)
2013
1.32
124
4,105
3.0%
76
181
34,467
33,705
16,603
2012
1.28
-221
3,929
-5.6%
82
222
31,384
32,088
16,901
2011
1.39
162
4,418
3.7%
103
225
40,391
39,741
17,495
2010
1.34
215
4,558
4.7%
95
223
39,405
39,118
17,134
Unit sales by Daimler Buses by Geography
Total
Western Europe
thereof Germany
Mexico
Latin America (excluding Mexico)
Asia
Other markets
2013
33,705
6,714
2,440
2,959
19,118
1,704
3,210
2012
32,088
5,851
2,039
3,477
17,800
1,886
3,074
2011
39,741
5,943
2,214
4,042
25,048
1,667
3,041
2010
39,118
7,168
2,635
3,878
23,215
1,462
3,395
Source: Daimler Benz Annual Reports
- 23 -
IMD-7-1606
Exhibit 10
Competitive Data: Financials of Volvo (Bus Division)
Figures in Millions Swedish Kroners, except for ratios and units.
Exchange Rate (SEK/US$)
Net Sales
Expenses
Income from investments in JVs and associates
Operating income
Depreciation & Amortization
Restructuring Costs
Capital Expenditure
Investments in JVs and other ventures
Research and Development Expenditure
Number of Employees
Group Volvo Sales
Group Income
Unit sales by Volvo Buses by Geography
Europe
North America
South America
Asia
Other
Total
Source: Volvo Annual Reports
2013
0.15
16,707
(16,910)
14
-190
-376
22
386
165
n/a
6,648
272,622
3,802
Units
2013
5,429
5,929
1,836
2,055
1,457
16,707
2012
2011
2010
0.14
0.15
0.14
19,587
21,823
20,516
(19,561)
(20,722)
(19751)
12
13
15
37
1114
780
-347
-472
464
-107
-5
n/a
314
367
343
147
23
46
n/a n/a
882
n/a n/a
n/a
303,647
310,367
264,749
11,258
18,115
11,212
SEK
SEK
Millions
Units
Millions
2013
2012
2012
2,146
6,200
2,491
1,752
6,675
1,826
2,434
2,794
2,560
1,822
2,149
1,564
756
1,768
856
8,910
19,587
9,297
- 24 -
IMD-7-1606
Exhibit 10
Competitive Data: Financials of Zhengzhou Yutong Bus Co. Ltd
Figures in Millions Chinese yuan (CNY), except for ratios and units
Financials
Exchange rate: CNY/US$
Revenue CNY Mil
Gross Margin %
Operating Income CNY Mil
Operating Margin %
Net Income CNY Mil
Capex Spending CNY Mil
Working Capital CNY Mil
Return on Assets %
Return on Invested Capital %
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
8.28
22,094
19.5
1,884
8.5
1,823
-921
4,743
11.96
19.61
8.19
19,763
20.0
1,637
8.3
1,55
-1,896
3,613
14.00
24.79
7.97
16,932
18.2
1,331
7.9
1,181
-992
1,302
16.12
27.89
7.61
13,479
17.3
1,005
7.5
860
-926
610
13.97
22.03
6.95
8,782
17.3
643
7.3
563
-250
327
11.06
17.65
6.83
8,336
15.7
630
7.6
531
-565
41
8.44
13.88
6.77
7,881
18.5
590
7.5
377
-254
-74
6.56
11.18
6.46
4,996
19.1
322
6.5
221
-196
601
6.91
12.61
6.31
4,603
19.0
269
5.8
186
-71
698
6.89
12.28
6.15
3,973
17.5
198
5.0
144
-120
571
5.82
9.56
Source: Company´s Annual Reports - Available at: http://financials.morningstar.com/ratios/r.html?ops=clear&t=600066&region=CHN&culture=enUS