Sunday, April 15, 2018

Scania Group President and CEO, Henrik Henriksson Was In Town - We Had a Session on the Shift Towards a Sustainable Transport System...and More

Thursday, the 12th of April 2018 was quite an interesting and rare day for those of us who have been covering commercial vehicles. Scania Group President and CEO, Henrik Henriksson was in town and a few of us were invited to spend some time with him that afternoon. The short meet-up session at Scania's headquarters in Bukit Jelutong was the location and it was an opportunity which I would not have missed as it was a chance to delve further into a person who basically stands at the forefront of what is happening in the world of buses and trucks.

Mr Henriksson really is at the forefront of a lot of things, He actually sits on the board of Scania as well as on the board of Scania's holding company, the Volkswagen Truck & Bus Management Board (Truck Board). If you are not aware, Scania is 100% owned by Volkswagen Group. So the session with him would be an experience with someone who has direct insight on what would be happening within the company as well as from a higher perspective. He was joined at the session by ScaniaManaging Director for Scania Southeast Asia, Marie Sjödin Enström and Scania Group Executive Vice President and Head of Sales and Marketing, Christian Levin (pictured to the left and right of Henriksson respectively).

Whilst the time spent was short, those who attended managed to put some questions together. 

The first that was put to him was on Scania's future plans withing the Volkswagen Group. As most are aware, Volkswagen group also has MAN under their belt in terms of commercial vehicles. MAN also has a presence here in Malaysia and other countries where they actually compete side by side against Scania. Henriksson had mentioned that tt has always been this case where Volkswagen Group allows this healthy competition as there are still some market segmentation between the products. 

When further asked about Volkswagen Group's proposed float of Volkswagen Truck & Bus Division, he also mentioned that things should remain the same as it has always been the groups philosophy to do so. This is much like how their passenger car brands tend to have some overlap in terms of sales segment. In passenger cars, you see Volkswagen brands like Volkswagen, Skoda, Seat and even Audi have some overlap against one another even though they compete at different price points and are bigger in different countries from one another. This may have been a simple enough question, but it is important as in the world of companies, conglomerates and multi-national companies, we do not know what would happen next as there may be mergers as well as more division between a group of companies.

The second issue that was brought up was how Scania intends to play a leading role in the inevitable shift towards a sustainable transport system. 

Sustainability has been Scania's long term goal these days and its business model is ever evolving to meet this objective. Right now the company has moved into identifying key activities that drive value, removing costs that aren’t contributing to business goals and reinvesting in strategic growth initiatives that improve competitiveness. It is all about sustainability for Scania from a very holistic point of view.

“Sustainable transport is all about moving people and goods while contributing to economic and social development without jeopardising human health and safety or endangering the environment. For Scania it is evident that sustainability and profitability go together, here and now and increasingly so in the future,“ said Henriksson. 

Asia is a very encouraging market for Scania according to Henriksson, where he says the Scania business model which focuses on total operating economy and vehicle uptime is starting to make perfect sense to their customers. Scania’s business model is about understanding and improving the revenue and cost aspects of its customers applications or industries.

Henriksson mentioned that he believes that businesses that are not part of developing solutions to the sustainability challenges of our time will struggle to survive. For us the question is not whether a future of sustainable transport will come, but when. It is towards this future that we are working in close cooperation with our customers and customers’ customers.”

In order to do that, Scania has had to come up with solutions that eliminate waste and reduce inefficiencies in the entire transport system based on their three pillar approach to sustainable transport. These are Energy Efficiency, Alternative Fuels and Electrification, Smart and Safe transport. It includes vehicles and services, which are designed and optimised to improve fuel efficiency and maximise the vehicles’ uptime in operation.

Scania's holistic and sustainable transport solutions also include driver training and coaching that are aimed at better fuel economy and reducing the impact on the environment,. These creates cost saving values for their customers and makes their businesses resilient for the future. Henriksson mentioned that ensuring customer profitability through sustainable transport solutions and pursuing responsible business are complementary, long-term perspectives whilst continuing to be a profitable company.

The company must be doing things right. Even with this very balanced and responsible approach Scania’s net sales had risen to a record high for its 2017 financial year. The company met with an increase of 15 percent compared to the previous year along with increases in operating income and revenue. Vehicle orders actually surpassed 100,000 for the first time as order bookings for trucks rose by 30 percent compared to the previous year. 2017 was a record year for Scania.

“Our success is built on our ability to provide our customers with profitable and sustainable transport solutions that contribute to the success of their businesses. Scania’s business model, our principles, working methods and approach to sustainable transport will continue to be the platform for how we create value for our stakeholders.”said Henriksson.

One of the new initiatives created in Malaysia to attract new customers as well as maintain current customers is where Scania has been the first to introduce an enhanced and industry-leading 3-year warranty with unlimited mileage together with 3-year Scania Assistance and 10-year Scania Fleet Management for the trucks sold for operators to get the best Total Operating Economy. 

The demand for sustainable transport solutions is also increasing from the customers of Scania’s customers who are the buyers of transport services with urban authorities - already prompting a switch to transport that uses biogas, electric or other fossil-free energy sources. Alternative sources of fuel like biogas are being pushed by Scania as one of their projects for environmental and business sustainability.

“We work across boundaries with cities, operators and their customers too, taking thewhole transport system into consideration in a systematic way. The world can’t wait for a ‘one size fits all’ solution; the conditions and issues vary so much from place to place that there is no silver bullet. We urge authorities and institutions to enable and simplify the use of them all. We have solutions here and now!”

“Our aim is that wherever in the world you go to buy a Scania solution, you should be offered an alternative to a fossil-fuel vehicle. We are committed to making sustainable solutions our standard offer and fossil-fuelled the alternative. We have decided to take the lead in the shift towards a sustainable future of transport and logistics and we stand by it.”

Henriksson noted that rapid urbanisation is putting huge strain on cities worldwide such as Kuala Lumpur where traffic congestion, environmental challenges and safety issues are facts of life.

“The huge growth in cities is driving innovation in both logistics and public transport, as cities tackle congestion, pollution and road safety by turning to partnerships to provide new transport solutions.”

“The world urgently needs to break the correlation between increasing demand for transport, and increasing carbon emissions, noise, congestion and accidents. We are approaching a tipping point, where the convergence of new technology and business models will result in a state where sustainable transport solutions will take off and become the “new normal” and the current unsustainable solutions will be phased out.”

“By being at the leading edge of this change journey Scania is better positioned to help our customers maintain and improve their profitability in a fast changing world. At Scania, we believe that there is no single solution that will take us to a sustainable transport system. Rather a holistic approach is called for, considering the specific transport assignment and the maturity of the logistics and infrastructure in different parts of the world.”

Henriksson added that Scania’s customers do not have to wait to adapt their businesses to a sustainable transport system because the solutions are already available.

Scania offers a broad range of platforms and services now, to support our customers businesses today and tomorrow. Sometimes, Scania can actually point their customers in the right direction especially if the customer requires dealings with others who are sustainable in nature too. One example is if a customer requires a source of environmentally friendly biogas made from palm oil, it would be in Scania's best interest to assist in guiding their customer to where the most sustainable and eco-friendly palm oil producer is out there. 

“No matter where our customers are on the journey to sustainable transport, regardless of which type of driving is involved or what the local conditions are, there is an alternative solution from Scania to order, here and now. We know that sustainability has to go hand-in- hand with profitability and the good news is that additional cost from some measures taken can be offset by others that reduce waste and increase efficiency.”

“For our customers today, environmental and social impacts are prompting their customers and consumers to demand more responsible business, adding to the constant pressures of just-in- time deliveries and tight profit margins. By continuing to offer relevant sustainable transport solutions, Scania can provide our customers with the right tools to meet their customers’ needs.”

The final issue which was brought up was on Scania's autonomous vehicle program in light of the recent accidents that has happened to passenger cars from Tesla and also ride sharing Uber. 

We asked whether Scania has taken any added precaution or have re-examined their safety protocols when it comes to their autonomous and semi-autonomous vehicle testing. 

According to Henriksson, Scania has believed in having the necessary systems in place. Their journey for autonomous vehicles have now led them to having some of their autonomous vehicles running in mines and other closed off areas. As for autonomous vehicles on normal roads, it comes down to having a proper system in place and it would seem from what we gathered from him is that the research and development on autonomous vehicles by Scania is still ongoing and progressing according to their plan and timeline. 

So the answer would be that no, the recent incidents have no real bearing on the outcome of Scania's progress in the field of autonomous vehicles barring any new legislature or regulation which may arise from governments of course.

It definitely was quite an interesting session indeed. The forty-five minutes we had wasn't long enough but that being said, it was an afternoon well spent.

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