CV SHOW 2006 – DAF TRUCKS PRESS CONFERENCE

PRESENTATION BY STUART HUNT, MANAGING DIRECTOR
We meet at what is probably the time of some of the biggest changes in the CV industry for 20 years. I’m referring not only to the onset of digital tachographs just next week but more particularly to the arrival of Euro 4 legislation less than six months away.

This new standard represents an amazing advance in terms of environmental friendliness. Its easy to forget that in just 13 years the trucks we make and sell and your readers buy and operate have become 94% cleaner in terms of particulate emissions and emit 75% less NOx.

Prior to 1993, when Euro 1 was introduced, the only factor truck designers had to consider was operating efficiency – how to get the most out of their vehicles. Since then of course the twin pressures of ever more stringent environmental legislation and rapidly escalating fuel costs have risen to prominence. The challenge for us manufacturers today in 2006 is how to go on delivering peak operating efficiency whilst still meeting these external pressures.
You’ll be hearing more shortly – and seeing for yourselves later this evening and tomorrow – just how we’ve met that challenge.

But first let me talk about the market environment in which we operate here in the UK. As I said, one of the twin ‘hot topics’ for the CV Show is the onset of digital tachographs, just days away. While this is a big issue for many operators I am very hopeful that, in time, it will be seen to be akin to the ‘Millennium Bug’ in terms of long term impact.
There are problems in the short term for sure – it seems that around only 10% of drivers have so far applied for their ‘smart card’ without which the trucks to which the new tachographs are fitted cannot be driven.

I hope the drivers amongst you will have applied for yours – if you want to take full advantage of our LF and CF forthcoming ride and drive event in Eindhoven you will need one!
For us, the digital tachograph is having an impact on sales. While the overall UK truck market is up by some 4% year to date, we’ve seen a more than 8% growth in the first half of April as operators pull forward purchases ahead of the cut off date this weekend.

But how are we doing inside that growing market? I’m pleased to be able to report that DAF’s market share in 2006 to date is running at over 27.5% compared to the 25.5% we achieved in the same period of 2005. In fact, we’ve already registered almost 5,000 trucks this year.
When we last met just before Christmas I reported that DAF had scored a notable achievement in 2005 – by leading every sector of the UK truck market.

I’m delighted to be able to say this evening that we’ve maintained that performance and remain leader in every sector. What’s more important to us than the pure numbers is the consistency in our performance that this represents – it means that we are keeping customers happy right across the board.
But what is happening within those differing sectors – is overall demand going up or down? Well, I can report that multi-axle sales – those related to the construction industry – continue to grow and, indeed, sales of all types of rigids are following an upwards curve. Tractor sales are relatively static, although you need to bear in mind that that follows a very strong performance in this sector in 2005. Clearly the digital tacho issue is impacting registrations in the short term, but the underlying trend across all market sectors remains healthy – 2006 will be another good year.
That’s the market story so far – but of course virtually all those sales I’ve talked about have been of Euro 3 products. But our offering and focus at this Show is of course all about Euro 4 and even Euro 5.

Tomorrow we are launching a completely new range of DAF trucks. The magnificent XF105, while already familiar to many of you, is making its UK market debut and deliveries are just beginning. There’s a story about one of the very first to reach a customer in our press pack.
Our new LF and CF models are making their first appearance anywhere – this is their premiere showing and we’re honoured that the UK market is the first in Europe to be able to unveil them to our customers. Tony will tell you much more about them in a few moments.

I want to talk about just one element of our new trucks: they all employ DAF SCR technology. Now I could extol the virtues of SCR versus EGR but in my view that is not what operators are interested in. They are interested in lower operating costs, higher productivity and enhanced durability. The technology choices to achieve that are our problem not theirs – although, by the way, we chose SCR because in our view it does deliver the lowest operating costs, the best productivity and the highest reliability. In the truck business it’s all about operating costs and SCR will deliver the most economical solution.

What is of more concern to our customers is the impact the legislators may have on those operating costs – and those legislators could be based either in Brussels or – for instance - County Hall, London.
All over Europe operators are facing a choice – of whether to go to Euro 4, as legislation demands, or whether to go directly to Euro 5, even though it is not mandatory until 2009.

There are cogent arguments as to why British operators should give this second route serious consideration, aside from the obvious corporate social responsibility one of making a further dramatic contribution to improving air quality.
The Reduced Pollution Certificate (RPC) can reduce truck operating costs by up to £500 a year for the largest trucks operating at Euro 4 or Euro 5 and will last for the life of the truck. A six or eight wheeler can benefit by £370 a year, although – with a VED saving of just a fiver a year – its really not worth it for a 7.5 tonner. But, of course, this subsidy ends on October 1st this year.

However, the Chancellor’s recent Budget speech stated that: “The Government will continue to consider the scope for an incentive for early take up of Euro 5 standards for HGVs” – suggesting that the RPC may be replaced in some form.
Some manufacturers, I have to say DAF included, are able to offer trucks which already comply with the Euro 5 emission standard, largely thanks to incentive schemes in countries like Germany, Austria, Switzerland and Holland (where its clear that Euro 4 take-up is being overtaken by Euro 5).

London’s Low Emission Zone (LEZ) plans for 2010 will require Euro 4 or an entry charge of £200 per day and who knows when Ken Livingstone will choose to penalise all non Euro 5 vehicles. The impact of the London LEZ – and the ones no doubt being planned in other cities up and down the country – will not only be on air quality but also on truck resale values.
Already a number of European cities are measuring air quality and, also by 2010, will be obliged to differentiate charges on toll roads in proportion to the vehicle’s environmental impact.

Faced with all of this I think there is an argument for considering an immediate switch to Euro 5.
Yes, the truck will cost more – as much as £1,000 more per truck compared to Euro 4, but that could be easily offset by the enhanced residual value. And you’ll need an extra £150 to £200 worth of AdBlue each year. But remember we talked about an LEZ charge of £200 per day.
So there are three good reasons I could make to UK trucks operators for considering Euro 5 now: you’ll be running cleaner, you can promote your green credentials and you should be able to justify it to the accountants.

As operators review their buying strategies over the coming months I think taking the direct step to Euro 5 is at least worthy of consideration.
But now let’s look at what we have to offer the market today with our new range. Over to you Tony …REMARKS BY TONY PAIN, MARKETING DIRECTOR
As Stuart said, we come to the NEC with a complete new range of trucks for the UK, and we’re showing five of them on our stand. There are some common themes to all of our new trucks – lower operating costs through improved fuel economy of up to 4% compared to Euro 3 models, and things like increased oil drain intervals – of between 25 and 30%, meaning lower maintenance costs. All of them offer improved productivity – higher torque levels over a wider rev range mean that it is easier to keep it in the green band, and deliver more responsive performance. In the areas of comfort and safety, the entire range now has automated transmissions available, right through from 7 _ to 100 tonnes, including six and eight wheelers.

There are new steering wheel controls for engine brake, cruise control, variable speed limiter and hands-free telephone operation – ergonomically arranged so that complete control can be maintained without the driver’s hands leaving the wheel. Even the phone numbers are displayed on the central information panel in front of the driver. New interior trim colours are warmer throughout and the driver benefits from much wider fields of vision from the new four mirror arrangement across all models. Floor areas are cleaned up by moving controls to the dash panel, making cross cab and bunk access easier than before.
So you can see that the new DAF range adds much more operator value than simply applying SCR technology to achieve the new emission levels. We have been careful to package the SCR catalyst and AdBlue tank in such a way that the chassis is left with maximum flexibility for the bodybuilder and to still allow up to 1,500 litres of fuel to be carried on a 4x2 tractor with enough AdBlue to treat at least two tankfuls of diesel. It’s about minimising the impact of new emission levels on the way you run your trucks, but offering extra in terms of performance and comfort whilst delivery lower operating costs.

The top of the range XF105 is finding new friends in the UK. The exhibit shown is a 6x2 Super Space Cab 510 bhp model, with 12-speed AS tronic box in Euro 5 format. It is sure to attract a lot of attention from both owners and drivers, with new semi-flat floor and revised interior features including a new fridge and storage compartments. Taking the point about minimising the chassis impact of SCR, this XF105 has a fuel tank capacity of 580 litres, which is actually 80 litres larger than the previous largest available on a 6x2.

The new CF is represented by two examples on the stand, a CF85 4x2 tractor and a CF85 8x4 rigid. In addition, the new PR 9.2 litre engine, available in either Euro 4 or 5 format in the CF75 series, is displayed separately.
The CF85 is available at ratings of 360, 410, 460 and uniquely for this size of truck, a 510 hp derivative. All versions will again be available from day one at Euro 4 or Euro 5 emission level to take advantage of any RPC incentives that come in.

The show exhibit CF85 tractor is a 410 hp example, featuring a Space Cab, and again AS tronic 12 speed transmission. The new combi lights in the bumper, Xenon headlamps, four mirror arrangement in cab colour and aluminium strip on the front grille all distinguish the new Euro 4/ 5 models from their predecessors externally, while internally the new dash arrangement and trim colours identify the new models.
The 8x4 FAD CF85 shown is a day cabbed 410 hp derivative on single reduction rear axles, although versions at 460 and 510 hp will be available with hub reduction axles. The torque level of 2000 Nm, achieved across a wide rev range from 1000 to 1400 rpm, is slightly higher than the previous 430 bhp models and means excellent on and off road performance.

The new LF models feature new PACCAR 4 and 6 cylinder engines of larger swept volume than previous at 4.5 and 6.7 litres respectively. Available in the LF45 and 55 series, they promise even better fuel economy and driveability through higher torque figures at Euro 4 emission levels. And the availability of the new 6-speed AS tronic automated gearboxes give new life to the entire LF range. Already the LF is Britain’s best selling light truck range and the new drivelines, combined with enhanced driver comforts, should keep it that way. The external changes include a new grille, combi lights in the steel bumper and four mirror arrangements in line with the rest of the DAF family. The interior of the new LF features a new steering wheel with controls for the standard exhaust brake and cruise control, as well as variable speed control, and revised seat trim.

The LF45 shown is a 7 _ tonne example,with day cab and is fitted with what we believe will be the most popular engine power at 160 bhp. 140 and 180 bhp will also be available in 4 cylinder derivatives, and also 220 and 250 bhp available in the LF45 up to 12 tonnes. The new 6 speed AS tronic is fitted in this model, which promises even better economy and clutch life on city distribution operations.

The LF55 here is an 18 tonne sleeper cabbed 220 bhp model, again with an AS tronic gearbox, although 6 and 9 speed manual boxes remain as standard. The optional price of the AS tronic automated box in the LF55 is £1,600 by the way (similar to the price of an automatic box on a Vauxhall Vectra).
The LF55 at 18 tonnes offers superb productivity. Now with up to 280 bhp available, and up to 32 tonnes train weight, this truck offers a remarkable payload capability. The LF55 with sleeper cab and automated transmission, using aluminium wheels can still come in at under 5 tonnes, offering a full
13 tonne body/payload allowance – up to a tonne more than some competitors.

So that is a very brief run through of our new model range and what we have on show here at the NEC – our clean route to low operational costs. It’s a very exciting time for us at DAF – it’s a rare day when we launch an entire new range of vehicles at one Show – especially here in the UK. So please join us now on the stand for a quick preview of those new models.