Following is the transcript of remarks by James L. Hebe, president and CEO of Freightliner, LLC, at the Mid-America Truck Show in Louisville, Ky., on March 22, 2020. Main topic: Introduction of the Freightliner Sprinter van.
Thank you all for attending this morning. We have some particularly exciting new vehicles to introduce to you today. These include a new deluxe version of our Columbia highway tractor, a Mercedes-Benz transmission for our Freightliner Business Class and Sterling Acterra family, and the focal point of this presentation - which is a product you would scarcely have imagined coming from Freightliner just a decade ago, when we were still a Class 8 manufacturer, period.
Since then, however, our mission has changed right along with the market. Right along with our customers. Right along with their customers. It is obvious that at the level of competition today in the trucking industry, big trucking companies need to provide multimodal transport solutions, and have a lot to gain from a manufacturer who can provide a total trucking solution.
At the same time, emerging changes in the U.S. economy are fundamentally transforming distribution patterns. At Freightliner, we intend to ride the crest of this new opportunity and be there to help trucking companies, private fleets and small businesses alike respond to these changes in the most timely and intelligent fashion.
Over the last decade, you've seen Freightliner's commercial product offering expand from exclusively heavy-duty Class 8 to our 5, 6 and 7 medium duty Business Class then to Class 3 to 6 chassis in the form of our hugely successful step vans from Freightliner Custom Chassis . . . forming what is easily the most comprehensive commercial truck product line in North America.
Today it's my privilege to unveil the next expansion of our sweeping trucking solution -- one of the single most promising new products for Freightliner, our future growth and our strategy of supporting an entirely new Class 2 and 3, light commercial transport customer base.
The new Freightliner Sprinter is in itself an engineering and design marvel -- the likes of which commercial van customers have never before experienced. But it's also a timely response to a burgeoning need for better, more versatile, more efficient light-duty delivery vehicles -- a need precipitated in large part by the revolution being wrought in this country by E-commerce and on-line retail.
Don't let the recent purge of ill-conceived and uncompetitive dot-coms distract you from the impact that Internet commerce has had and will continue to have on the package delivery business. The Sprinter, in fact, is part of the solution to the problems that decimated so many dot-coms in the first place. You'll see this as a theme of our communications campaign including this introductory video I'd like to roll for you right now.
This same theme -- E-commerce needs to be as revolutionary on the street as it is on-line -- echos in our print campaign for the Sprinter, in ads now appearing in the Wall Street Journal and USA Today.
Hindsight is a beautiful thing, but it's obvious today that thousands of E-commerce entrepreneurs forgot -- or maybe they were too young to remember -- a couple essential ingredients of any enterprise: marketing and delivery. If you build a website, they will not necessarily come. But if you invest wisely in telling people it's there, then deliver quickly and efficiently when they buy -- well, at least then you stand a fighting chance among the competition. Too many dot-coms ignored the fact that the ability to deliver a profit starts with the ability to deliver. That means delivering your products. Delivering on your promises. Delivering progressive ideas in more ways than just on-line.
We believe the Freightliner Sprinter is just this kind of an E-commerce enabler -- and a lot more. Until now, regardless of their needs, e-tailers, retailers, delivery companies and vocational service companies basically had two choices: they could purchase the heavier-duty walk-in van, or step all the way down to the standard full-sized commercial van product that automakers haven't changed in about two decades. Very often, the new realities call for something in between. That's what the Sprinter delivers, along with a new standard of efficiency, reliability, versatility, handling and safety.
The Sprinter represents a tremendous commitment by Freightliner to serve this broad and rapidly growing spectrum of commercial van customers by providing them with a more complete range of vehicles and Freightliner support services. We aren't exactly strangers to this market. Freightliner Custom Chassis Corporation has been here since 1995 when we began marketing walk-in van chassis across North America. Today, we hold a commanding 65% share of the diesel van chassis market, and our ability to rapidly respond with new models and product options has been key to our success.
And if ever this market was asking for new options and new ideas, it is now. Even if the Internet isn't the tidal wave of total change it was once touted to be - even if it is only an extension of traditional business connections, not a replacement for it, it is having a huge impact on the package delivery business.
This last holiday season, Internet shoppers spent an estimated $12.5 billion on-line, which was up 71% over the previous holiday period. Some 22 million people made online purchases in the fourth quarter of 2000.
Small wonder that major package delivery services and postal services all saw record deliveries in 2000. Small wonder that this surge of activity is stimulating the demand for van-type vehicles all over the world from 3.2 million vehicles annually in 1999 to 4.6 million vehicles by 2010.
The annual U.S. and Canadian market for the large Class 2 and 3 van market approaches 360,000 units, including large pickup cab chassis, low COEs and strip chassis. So you can see the tremendous opportunity ahead for the Freightliner Sprinter.
Small wonder, too, that one of our first customers for the Freightliner Sprinter is FedEx, which has already placed an initial order for 1,962 units. Our walk-in vans and other transportation solutions have long been a part of many of the world's largest and most successful delivery organizations, including FedEx, UPS and the U.S. Postal Service.
The Sprinter is the latest demonstration of Freightliner's commitment to be a full-range commercial vehicle supplier to its customers -- and, in combination with our dealers, suppliers, information systems and custom capabilities, to be a singularly inclusive trucking solutions provider.
From the first glance, the Sprinter looks different, and indeed it is. This definitely is not your father's Econoline!
It's also not an unknown quantity. The Sprinter was introduced in Europe in 1995 by Mercedes-Benz. With us today is my colleague Rolf Bartke, who is responsible for the business unit Mercedes-Benz Vans throughout the world. This is a highly successful business for DaimlerChrysler and Rolf is responsible for the vans' success worldwide. In less than five short years, the Sprinter has become the top-selling commercial van in the highly competitive European market.
So the resources of the world's two commercial vehicle powerhouses, Mercedes-Benz and Freightliner, combine in the Freightliner Sprinter.
Mercedes-Benz will manufacture the vehicles in Dusseldorf, Freightliner will assemble, sell and service them in North America under our nameplate, and our customers will immediately reap the benefits of a proven and exceptional van design.
In May, assembly operations will get underway at the Freightliner Custom Chassis plant in Gaffney, South Carolina, where we also manufacture our walk-in van chassis and other chassis products. The plant, which has undergone a $12 million expansion in preparation for Sprinter production, will have the capacity to produce 30 Sprinters per shift when fully operational.
Major fleet sales efforts have already begun, and we expect the first Sprinters will be available in our new light commercial franchise dealerships in June. To begin with, this dealer network will consist of nearly 50 Freightliner dealers in key metropolitan areas, with continued expansion in the U.S. and Canada.
The launch of the Sprinter will serve as the platform for the formalization and execution of our Freightliner light commercial vehicle strategy. For all the reasons outlined in our opening video and my preceding comments, we believe in the premise that classes
2 - 5 will become more important in the commercial sector. And, we at Freightliner see it as our most promising growth market for the future. However, it is not a homogenous segment that can be covered with a single product. The customers, vocations and vehicle configurations make this range a proliferation of various segments each with unique needs. To fulfill those, we as a manufacturer must have multiple vehicle strategies.
At a minimum, to fulfill the needs of this segment, there are at least three distinct vehicle strategies that we will launch. They are a light van strategy, a truck strategy and a bus strategy. In addition, distribution requirements are also unique and different from our traditional businesses. To meet the location and service needs of this very discriminating buyer, we are responding with a new light vehicle distribution strategy and the introduction of a light commercial franchise strategy.
Coupling together our Sprinter products, and future commercial van developments from Mercedes, our step van products and a new line of Freightliner cab-chassis products that will be introduced later this year, we have developed a Freightliner light commercial vehicle franchise that will:
a. cover the products I just mentioned
b. have unique facility and location requirements
c. cater to the demands of an urban private commercial customer base
d. be separate and distinct from our Class 8 dealer locations
Our first choice to become Freightliner Light Commercial Dealers is, of course, our Freightliner dealers. However, we envision offering it to candidates outside the current dealer infrastructure in locations where we need coverage and cannot achieve it through our existing network.
This market segment 2 - 5 is one in which Mercedes-Benz dominates in Europe and elsewhere globally. Now, by leveraging our sister companies' products together with our own developments, by focusing a separate and unique distribution system in these markets and by attacking each vocational segment in a focused and separate manner, we are confident that Freightliner can and will become a leader in these important markets in North America as well.
We will offer the Sprinter in three basic configurations, each with three wheelbase lengths, and two roof heights.
The Sprinter Cargo Van will be available in three wheelbase lengths: 118 inch, 140 inch, and 159 inch. And, in two roof heights: 64 inch and 73 inch. The standard roof is nearly 12 inches taller than any competitor's vans available today. The standard vehicle is rated for 8,550 pounds with 4,123 pounds of cargo capacity and is also available with a 9,990-pounds gross vehicle weight rating for a payload capacity of 5,105 pounds. That's about a thousand pounds more capacity than the Ford Econoline E-350 with a 138-inch wheelbase and a 9,500-pound GVW.
The Sprinter Passenger Van will come available in the same wheelbase lengths and roof heights as the cargo van, as well as a GVW of 8,550 pounds.
In 2002 we will make available a cab/chassis version, which can be fitted with a flatbed, dump, or service or utility body. A two-passenger cab chassis will be available in two GVW configurations -- an 8,550 vehicles with a choice of 118, 140 or 158-inch wheelbase lengths - and a 9,990 GVW vehicle available in the 140 and 158-inch wheelbases. Their roof heights will be a standard 85 inches and 86 inches respectively.
Now, let me take a few minutes to focus on the features that make these vehicles so remarkable.
From the first glance, you notice the Sprinter's sleek styling and the unusual height. The height of the Sprinter alone signals that this is one commercial van that's serious about maximizing room for cargo. Be sure to get in one of the Sprinters on display in our booth. In the 73-inch high-roof configuration, this will be the only commercial van out there where a 6'2" driver can stand completely upright.
Before today, if you wanted a van with that kind of stand-up headroom, you either had to buy a chassis and put a walk-in box on the back, or you had to buy one of the automakers' vans and have someone cut the roof out and build it up. And even that kind of aftermarket conversion is only a partial solution at best, because the rear and side doors stay the same height. While you can make room inside for tall loads, wait til you try to get them through the doors.
The Sprinter, on the other hand, is the only van in North America to offer full-height large doors. With the Sprinter's smart design, you can load cargo vertically instead of having to lay it in the back horizontally, or strap it to the roof. Now doesn't that look like a more pleasant and productive way to do business?
And it's just not the roof height that helps maximize payload -- the Sprinter isn't just taller, it's also more vertical. Unlike most other vans, the sidewalls are nearly vertical from the floor of the van to the bottom of the windows. All of which adds up to the ability to carry more cargo than competing vans -- some 20 percent more than a comparably-spec'd Ford or Chevy van -- so, now, customers who want a smaller profile, light-duty vehicle than say, a small walk-in van, don't have to give up so much interior space.
This design also provides more usable space and makes interior conversions simpler. Vocational operators who want to use their vehicle as a mobile workshop -- people like locksmiths, plumbers, electricians, and others -- will find the Sprinter extremely versatile and comfortable for those needs and more.
Of course, this enhanced height and width also makes a world of difference for passengers. When passengers board the Sprinter, they don't have the sensation that they're crawling into a cave.
The extra height offers them an open, comfortable ride and easy ingress and egress. That makes the Sprinter an ideal fit for adult transportation where the number of passengers is fewer than the typical passenger van accommodates. Its users still enjoy the feel of a spacious, premium shuttle bus, rather than a cramped and confining van.
So you don't have to look very far to realize that the Sprinter brings a new dimension of cargo capacity and user comfort to the market.
But now let's look under the hood -- because this is where the Sprinter really outpaces the standard commercial full-sized vans on the market.
The competition for the Sprinter is the gasoline-powered commercial full-sized van products by the automakers.
The heart of the Sprinter van powertrain -- and our most productive differentiator -- is the Mercedes-Benz 5-cylinder common rail direct fuel injection engine. Providing 156 hp and 244-lb. ft. of torque, the Mercedes diesel engine performs at the level of its competitor gas-engines that are nearly twice its displacement size. The ultimate result of this engine technology is better fuel economy in a longer-life diesel engine with exceptional performance. The Freightliner Sprinter will receive the federal LEV rating certification in April 2002 and in the five states with California Air Resources Board certification requirements (which are California, New York, Massachusetts, Vermont and Maine), we will have a Sprinter model that meets this most stringent standard in October 2003. All components feature long maintenance intervals, which combined with fuel economy, give the Sprinter an exceptionally low overall cost per mile of operation. And, the Sprinter comes with a standard 5-speed automatic transmission. It's one of the smoothest transmissions I've experienced in either a commercial vehicle or passenger automobile.
In fact, as much as the owner will appreciate the economy and durability of the powertrain, the driver will appreciate everything about how the Sprinter drives and handles. The Sprinter has been designed to optimize vehicle safety, driveability, comfort, load stability and maneuverability -- and to be, in short, the best handling van on the market.
The designers placed particular emphasis on the axle components to ensure a stable ride and to allow for larger payloads. The Sprinter also includes 4-wheel disc brakes with 4-wheel anti-lock braking and rack and pinion power steering. Its turning radius is actually tighter than that of many automobiles -- which means operators can navigate confined spaces without having to back up. As you know, that's not just a matter of making things easier on the driver - it reduces the hazard of accidents happening in the process of backing up.
Please take the opportunity while you're inspecting the Sprinter to sit in the driver's seat. You'll find the design of the controls to be much more friendly and car-like than other commercial vans. There's a direct correlation between comfort and safety, just as there's a direct connection between comfort and driver productivity. So this kind of smart, spacious driving environment should be important to van buyers whether they operate a fleet, or they are purchasing a couple of passenger vans for their church.
Notice when you're sitting in the driver's seat that the engine does not hinder your forward vision or protrude into the driver's area. The view out the large windshield is impressive and comforting in itself, with the hood sloped steeply out of the line of sight.
The Sprinter also shows the Mercedes-Benz pedigree when it comes to engineering active and passive safety systems. The body panels, for example, effectively absorb impact. There are air bags for both the driver and co-driver. The van features disc brakes and 4-wheel ABS, combined ASR traction control to help ensure all-weather directional stability.
And lastly, but certainly no afterthought, the Sprinter is distinguished by its environmentally friendly manufacture. Some 95% of its parts are recyclable, and it avoids the use of toxic materials and solvents. The Sprinter took off in Europe because is was a modern, beautifully engineered solution to putting the greatest possible cargo in the most compact, maneuverable, non-intimidating package -- considerations which are becoming no less important on this side of the ocean.
We have every expectation that businesses of all kinds in this country -- whether e-businesses or brick-and-mortar or ma-and-pa or dedicated P&D; -- will be quick to appreciate the revolutionary ability of the Sprinter to put a true commercial vehicle on a lighter-duty platform, with benefits of improved payload, enhanced fuel economy, better maneuverability, superior driver ergonomics and easy customization that includes more than 80 options and 15 option packages.
One more lesson investors have learned -- again -- from the collapse of so many dot-com pipe dreams, is that the old rules don't go away in the so-called "new economy". Products still have to supply a real demand. Innovation still has to be built on a firm and lasting foundation. Customers still need to have confidence in the companies they patronize. In the midst of the retrenchment we see going around us these days, the fact that the Sprinter is already one of Europe's great commercial vehicle success stories . . . the fact that it is engineered by Mercedes-Benz and backed by Freightliner, the two most respected names in commercial vehicles on both sides of the Atlantic -- all this really does make the Sprinter not just a promising product, but one that can deliver the goods for both ourselves and for our customers wherever the 21st Century takes us.