Coventry-based EvoBus UK has renewed focus and drive since Michael Thielmann took over as CEO in June 2014. He and director Mercedes-Benz Sales Marcus Watts talk to Andy Izatt about what has changed and how they see the market going forward.
It might have been days before Christmas, but EvoBus UK at Coventry was a hive of activity. Quite apart from workshop commitments there were new vehicles to be prepared and dispatched before the end of the year. Everyone I saw as I waiting in reception for the time of my appointment had a clear sense of purpose, but the welcome I had been given had been no less warm.
“EvoBus UK is totally different now,” CEO Michael Thielmann told me after he welcomed me to his office. “The shape of this business was determined by [wlm_nonmember][…]
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“We’re still working on improving the aftersales network to reflect the higher sales volumes we’re now achieving. Traditionally, EvoBus UK at Coventry was really the only place that dealt with our customers. Any issues were handled direct, but it’s difficult to cover such a huge area as the British Isles.
“Reengaging with our dealer service partners was definitely one of the big challenges we faced and achieving that has helped cement our current success. The level of service to customers is still not always where we would necessarily like it to be, but it’s a lot better than it was. We’re tackling the issues from every angle in partnership with our colleagues on the truck side at Milton Keynes with the objective of improving the situation further.”
Growing coach sales
We have taken a completely different approach to sales over the past two and a half years,” Michael continued. “The focus was placed principally on coaches and that’s the market we have been most successful in developing. We sold more than 260 units in the UK and Ireland during 2016. Just short of 60 of those were in Ireland where we sold just one in 2013. The overall figure for the British Isles is double what we were doing in 2014.
“Notable orders in 2016 included one from Shearings. It previously bought Setra, but has stayed with us buying Mercedes-Benz, confirming its second order for 43 Tourismos at Euro Bus Expo. Also notable is The King’s Ferry which has or is buying 17 Tourismos equipped with wheelchair lifts. A lot of operators are newly starting with Mercedes-Benz and we have far more customers now than when we were selling two brands.
“While the build quality is the same, there’s a distinct difference in Europe between what’s available on Setra and Mercedes-Benz coaches. In the UK the number of customers willing to pay the extra money for the Setra specification was just too small, but part of our successful strategy has been to give them choice in how they specify their Mercedes-Benz vehicles. That includes having the luxury seats normally reserved for Setra. Our line up at Euro Bus Expo made clear that what we’re offering is one ‘shell,’ but it’s up to the customer to decide what their vehicle looks like.
“We introduced a 12.2m 53-seater with a toilet last year, which filled an important gap in our product line-up. While we currently offer 12.2m two-axle and 13m tri-axle options, we’ll be extending the range in 2018 to include a 13m two-axle and 14m tri-axle.
“Judging by the feedback we received from operators at Euro Bus Expo we’re not anticipating any decline in sales during 2017. The show dividend will probably be around 100 coaches, but it shouldn’t just be quantified in terms of sales. The interest from potential customers was greater than from those placing orders and we’re still busy following up on that.”
Bus extended
Said Michael: “While most of the enquiries we had at Euro Bus Expo were for coaches, Citaro is once again generating interest. First Bristol Airport has ordered two artics while another seven are for Gatwick. Luton airport has also ordered more 12m vehicles. The articulated bus is a niche product in the UK, but still has its proponents. Daimler developed the right-hand drive version in view of the 2020 Olympic Games in Tokyo. The UK market alone would not have justified the engineering investment, but it will be available here from May.
“In 2016 we sold 25 Citaros many of which went to London operators for TfL (Transport for London) contracts. Epsom Coaches bought the K midibus for example, but we know there’s not much future volume business open to us now in the capital because of the focus on electric drive.
“Looking at past registration numbers, the 16 tonne and above bus segment has become ever smaller. In 2015, the overall market was about 3,000 units. It was 2,600 during 2014. 16 tonne and above was 150 units in 2015 compared 280 the year before so it dropped by almost a half. Of those 150 units, we registered 51 – 40%. That compares with 15% and 41 the previous year. We are a major player in that segment, but unfortunately that doesn’t translate into volume business.”
Building minibus
“There just isn’t the appetite amongst the large groups for a heavy duty bus at the moment,” said Director – Mercedes-Benz Sales, Marcus Watts. “While that probably won’t change, we have developed a minibus product that does fit some customer expectations. For operators that want to go smaller and more lightweight than can be offered by any of our competitors, we have the Sprinter City.
“Operators have got to look at new ideas to reduce costs if they want to keep some rural routes running and there’s an open mindedness now amongst the ‘plcs’. Having a complete product that’s not a conversion is an important selling point and I think our business could continue to grow in the coming year.”
“Sales in 2016 were a little bit over 100 units,” said Michael. “We only sell Dortmund factory built vehicles, but Dortmund also produces a more basic vehicle that’s sold in various seating configurations via the Mercedes-Benz dealer network based in Milton Keynes. That’s another 250 units.
“Sales have been growing steadily over the past couple of years. We hoped for a little bit more business in 2016, but minibuses are the first to be effected by the exchange rate because smaller vehicles mean reduced margins. It’s also a much more price competitive market because of competition from converters that can take advantage of lower local labour rates.
“Looking back on 2016, I don’t think there is much that we could have done better when it comes to coach sales. On bus we struggle against the current market preference for lighter weight vehicles while with minibus we’re slightly behind what we expected.”
Post Brexit
“The biggest concern for the year ahead is what happens with the exchange rate,” Michael said. “It affects forward ordering, pricing – everything. It’s lucky we’re part of Daimler which considers the bigger picture. It will look at how the exchange rate affects all of its businesses in the UK whether it’s cars, trucks, vans or coaches and buses. It’s good to know that we have got that broader perspective and backup.
“Daimler operates globally and while it’s unusual to have an exchange rate change like we’re currently experiencing in Europe, in Mexico or Latin America it is normal. While we have to reflect that change, it does not have to happen overnight. There’s a continual process of hedging that creates a buffer to a certain degree.
“What is actually happening is we’re going back to price levels from a couple of years ago. If customers have been getting better prices more recently, it’s easy to forget that maybe even just nine months ago it was different. There’s always a certain amount of uncertainty in business development, but our current order bank is inline with our expectations.
“Second-hand vehicle sales go hand-in-hand with new sales. It’s part of our complete service offering. We have a lot of customers that want to trade in so our used business is exceeding previous years as well. It’s now around 120-130 units annually.
“We’ve had customers who were looking to buy a more or less new coach and have ended up buying new instead. The second-hand market keeps us close to those who may not yet be ready to buy new, but who are slowly heading in that direction.
“Being in the second-hand market is not only a necessity – we enjoy that aspect of the business. Like new sales it’s seasonal and sometimes we struggle to have the necessary capacity at the right time. We’re still trying to find the proper balance when it comes to how many people we need to deploy, but in terms of vehicles we’re quite happy with current stock volumes.”
Supporting customers
“Our customer support is multifaceted,” Michael continued. “We have the sales team, customer support team and our service partners as well as mobile specialists. Some of that mobile support is provided by our service partners some of which also provide 24-hour service backup. I want all of those elements to work really closely together – a bit like a winning cycle pursuit team delivering the same precision, speed and success.
“Andy Howes is Director – Aftersales while Peter Richardson is Head of Key Account Service Management and an old hand when it comes to technical support. He has Key Account Managers covering three regions who report to him.
“The Key Account Managers used to look after coach, bus and minibus respectively, but we realised that that didn’t make sense because of the disparity in workloads. By going for a geographic focus instead, they can build a closer relationship with customers because they’re seeing them more often. It means we can have someone on a customer’s doorstep more quickly.
“The idea is the Key Account Managers work alongside Marcus’ Area Sales Managers. They’re all customer focused so they need to work closely together enabling us to deal properly with any concerns or issues. What I would ideally like is every time there’s a vehicle handed over, we have an aftersales representative there to let the customer know who they need to contact if need be.
“There are 27 Mercedes-Benz service partners around the UK and Ireland and a further 10 that provide that 24-hour support. They’re all independent truck or van business partners – sometimes both. That’s different to the rest of Europe where the dealership network is at least partially owned by Daimler. Some had just kept the franchise because it didn’t represent a big annual investment.
“What we have managed quite successfully to do is change thinking amongst the service partners so they’re more positive about what we do. We have got them fascinated about our product and created a business case for them to get involved. That has been possible because of our bigger sales volumes and also because we’re providing enhanced technical support to them from EvoBus UK in Coventry.
“We employ Adrian Dobson as our technical and training support specialist and his job is to answer technical calls. David Oliver is product trainer and such is his reputation he’s even flown to Singapore to deliver Citaro training in English there. He and Adrian work closely to deal with any issues that the service network might have.
“Then we have mobile service van support provided by us at Coventry or by some of the service partners as part of a co-operative effort. It means we can be really hands on undertaking repairs at customers’ facilities when necessary.
“Scotland is already covered in this way and we’ve put a van into Ireland as well. Our dealer Sparshatts in the south of London will start running one from February. In most areas, having a mobile van is not that essential because the distances to a local service partner are not great, but London is different because of the traffic situation.”
One vision
Said Michael: “When I first arrived at Coventry it took Marcus, Andy and I less than a few days to agree on a mutual understanding about the future business development. The advantage we had was that we were building from what was a very low base so everything we started to do headed in the right direction.”
“It’s refreshing that we’re aligned in our thinking,” said Marcus. “Michael and I come to the same conclusions quite quickly, but sometimes from different directions. When you work in a big corporate environment it’s rare that you’re given the opportunity to come up with your own plan and then have the freedom to implement it. The level of trust that has been placed in us is a reflection of Michael’s long experience with Daimler and his reputation. He came to Coventry with an approach that said I’m here to help and support, and to give guidance. We all used our own expertise to come up with a strategy that was approved and implemented.
“What we have achieved has come from having a consistent approach. We made some tough decisions that we thought were for the right reasons and we made good ones as well. If you make more good than bad, that’s a strategy in itself and everything starts to come together.
“Having come from a truck background it took a little while for me to understand that the coach and bus industry is a more personal business. It’s all about relationships. There’s a strong social aspect and we’re building friendships. It’s something that we all put time and effort into. Trust takes time to build and it needs to be maintained. It’s long hours and late nights, but that’s what’s required. When we recruited new people we chose those who were capable of building relationships.
“We recruited Ian Wallace from Volvo as Senior Manager Sales responsible for city bus, minibus and chassis. Ian is well known in the industry. Neil Gladstone has joined us from ZF. He’s the Area Sales Manager for Ireland while David Hobson covers Scotland and North of England.
“Having a dedicated sales person for Ireland has enabled us to grow our business. Historically most of our success has been in the south of the country. It’s a particularly personal approach over there.
“Appointing someone in Scotland who is Scottish made perfect sense and David used to be Engineering Director for First Glasgow. Before that he was the Aftersales Director for Volvo in Scotland. They are all really good with people and understand their needs and problems. They’re solution driven.
“We have often recruited from outside the industry – people who have run dealerships in the past, sold second-hand vehicles or come from an aftersales background. They understand the urgency of finding a solution. As long as they have got the people skills, we can teach them about coaches and buses.
“When I first joined EvoBus UK in 2007 there were four Sales Directors. Three years ago we had two. Now there’s one – me. The head count overall has been reduced, but we believe there has been a big step change in how we look after customers.”
Said Michael: “The business and customer approach we’ve developed is not according to the official sales book. We’re doing everything in a far more personal way.
“It’s probably the most important difference we’ve made to the business in the past two and a half years.”
Positive approach
Said Michael: “The cupboard at head office was full of product requests from the past that would have enabled EvoBus UK to grow its market. We generated sales without getting anything out of the cupboard.”
“We had a product portfolio that was underutilised so we changed our strategy,” said Marcus. “We’ve managed to grow the business year on year for the past two and a half years. Michael has been in this business a very long time and he was never going to be happy with doing just enough. We’re now very much busier than we were, but that creates its own dynamic. Our targets in 2016 were very difficult, but we set them ourselves. We could have made them so they were easily achievable, but where’s the fun in that?
“No one wants to work for a company that’s under performing. We had a rule that we didn’t talk about the products we don’t have – just the ones we do have. We all want to do the best we possibly can. When you have the right products and right relationships with customers, it all starts to come together.”
“We haven’t peaked yet. We have aspirations going forward. We want to keep a good sustainable volume of sales and continue to grow year on year. Yes, we have had a lot of conquest business, but conquest business from one year turns into repeat business the next. That tells us that the business is moving in the right direction. We’re being realistic about what could happen and what we can achieve.
“We want to deliver a good return for our staff. We want them to go home happy knowing that they have helped contribute to a growth strategy that is fully understood by everyone in the building. I think we have ensured that this business is sustainable.
Said Michael: “Sustainability is so important. As Marcus has explained, it isn’t just about sales volumes. It’s about our organisational structure as well. How we keep everything as it should be.
“We’re constantly reappraising and making sure we have the right people in the right positions. That is why I have a lot of confidence in those I’m working with. Being part of what has been achieved here has been so enjoyable. “There is appreciation at head office in Germany for the enormous dedication of our people. That’s why we’re getting the degree of support we are particularly on the logistical side. If everyone understands our case, it’s far easier to deal with people at all levels of the business.”
“The one thing we worked on very quickly after Michael’s arrival was building an excellent relationship with head office to the point where I think we understand what they’re thinking and they understand what we’re thinking,” said Marcus. “That relationship is the best I’ve ever known in my 10 years here. Everyone is extremely helpful.
“Success has given the whole business a buzz. Seeing all the hard work and effort over the past two and a half years turned into a positive result has been so rewarding. We wanted to make sure this business was sustainable and we’ve done that. It has earned its market share.”[/wlm_ismember]
