Service is a crucial factor for many customers when it comes to selecting a business partner. The KION Group therefore considers service to be a key way of retaining customers as well as an increasingly important line of business. To fully exploit the potential in this area, the KION Group offers its customers a wide choice of services. They include a broad spectrum of simple repairs, spare parts sales, warehouse planning (including administrative systems) and the organisation of automated processes. In addition, the KION Group offers IT solutions for truck and material flow management that provide cost transparency and boost efficiency. The well-developed service business is enabling the KION Group to cushion itself better against the impact that fluctuations in the business cycle have on its business with new trucks.
In 2010, service accounted for 46 per cent of revenue (2009: 49 per cent). This slight percentage decline is due to the sharp rise in the new trucks business on the back of the recovery in the industrial trucks markets. The KION Group divides its service business into aftersales, used trucks and rental business. The 'other' product category also includes services such as consultancy, IT solutions and warehouse equipment systems.
Diagram showing the breakdown of revenue in 2010
After sales business covers customers' individual needs
The KION Group's extensive global network enables it to offer all kinds of repairs and maintenance work. Such services are the most important part of the service business because they are required throughout a truck's lifecycle. An active fleet of currently over one million trucks provides a sound basis for these services. In the KION Group's brand companies, 7,000 employees look after customers' service requirements. More than 5,400 of them are inhouse service and workshop mechanics who are responsible for repairing and maintaining trucks. KION's own network is backed up by external dealers who work in cooperation with the brand companies.
The KION Group brand companies offer service contracts tailored to customers' requirements that encompass various services and materials. A modular concept enables customers to select the relevant regular maintenance services, ad-hoc repairs and materials that they would like included in their contract. As well as repairs and maintenance, customers can obtain spare parts and equipment for their trucks from the brand companies. The spare parts business is a crucial market because it helps the KION Group to reduce its dependency on the business cycle. The KION Group's brand companies have set up a 24-hour hotline, which ensures that their customers can contact them at any time. They guarantee that spare parts can be supplied within 24 hours anywhere in Europe.
Used trucks open up access to new market segments
Customers have the option of buying used trucks when their leasing or fleet management contracts expire. Used trucks also enable KION to operate in market segments that would be impossible or difficult to enter if it only sold new trucks. The used trucks are reconditioned by the KION brand companies' service network, often making them a lower-cost alternative to third-party new trucks with less sophisticated technology – and customers can still be sure of receiving the high standard of quality of the KION brands. At the same time, the used truck business contributes to the spare parts business, other aftersales services and financial services.
Rental trucks with variable services
In its truck rental business, the KION Group offers three variants: short-term rental, long-term rental and fleet management. Each of these generally also incorporates financing services.
- Short-term rentals cover customer requirements of up to twelve months
Short-term rentals enable customers to meet short-term requirements such as seasonal spikes in demand. The term of such rentals can be anywhere between one day and twelve months. The KION Group's local subsidiaries and dealers maintain their own rental pools to ensure optimum availability of trucks.
- Long-term rentals provide a comprehensive selection of products and services for an average of four to five years
The agreement consists of a long-term rental contract that runs for an average term of four to five years. It usually covers not just the financing itself but also services such as maintenance, repairs, spare parts and insurance. The package of services is tailored to meet the customer's individual requirements. At the end of the rental agreement, the customer returns the truck and can replace it with a new truck. Customers often extend their old contract or sign a new one.
- Fleet management particularly attractive to big-ticket customers
Fleet management is the most flexible form of rentals and is becoming increasingly popular with big-ticket customers in particular. The KION Group takes on the comprehensive management and financing of customers' truck fleets and ensures that the trucks are used in a way that offers maximum value for money. This includes analysing how the trucks are used and optimising the methods used to replace old trucks and to conduct needs analyses. The package of services is tailored to meet the customer's individual requirements. The KION Group has developed proprietary software applications, which it uses to analyse and implement fleet management processes.
Financial services as a sales function
The Financial Services function provides an important central service for the three segments of Linde Material Handling, STILL and OM, and represents a valuable sales tool and means of customer retention. Some of the leasing business organised by German LMH dealers is processed by Linde Leasing GmbH (Linde Leasing), in which Linde Material Handling GmbH holds a minority interest. Linde Leasing is included in the KION Group's consolidated financial statements using the equity method. More than half of the KION Group's total unit sales are supported by financial services. They cater to the increasing demand for one-stop solutions that, in addition to the trucks themselves, include finance and other services and even, in some cases, full fleet management and automation.
Financial services are closely linked to truck rentals. The leasing portfolio grew moderately to 223,000 trucks (incl. Linde Leasing). This equates to a replacement value of around €4.32 billion as at the end of 2010. The key markets Germany, France, UK, Italy and Spain accounted for 75 per cent of the total portfolio at the end of last year. The proportion of long-term rentals accounted for by the core markets was unchanged on the proportion at the end of 2009 at around 82 per cent.
