The KION Group has an integrated business model that incorporates products and services and covers every step of the value chain so that it can offer comprehensive support to customers worldwide: product development, manufacturing, sales and logistics, spare parts business, truck rental and used trucks, financial services and system and software solutions.
The KION Group earns most of its consolidated revenue from the sale of industrial trucks. In the reporting year, new products accounted for 56.1 per cent of the Group’s revenue, while the stable and profitable service business generated 43.9 per cent.
The KION Group operates a multi-brand strategy involving the three global brands Linde, STILL and Baoli plus the three regional brands Fenwick, OM STILL and Voltas MH.
Worldwide research and development activities (R&D) enable the KION Group to consolidate and extend its technology leadership. The Company plays a pioneering role in hydrostatic and diesel-electric drive systems and in innovative energy-efficient and low-emission drive technologies (electric drives, hybrid drives, fuel cells). As at the end of 2013, the KION Group employed a total of 944 developers, of whom 232 worked in Asia. Development costs corresponded to 2.5 per cent of consolidated revenue in the year under review, putting the KION Group above the industry average. The focus of the Group’s R&D activities is described in the research and development section.
The KION Group offers customers tailor-made solutions and only makes trucks specifically to order. A large proportion of new trucks are fitted with technical components developed especially for a particular order. The Linde and STILL brands’ premium positioning is underpinned by advantages for customers in terms of total cost of ownership (TCO). The trucks’ hallmarks are cost-efficiency, high productivity, comparatively low maintenance and high residual values.
New truck sales increase the installed base in the market, providing a basis for service business (spare parts, maintenance and repairs) within the KION Group’s integrated business model. The brand companies also have extensive used truck and rental truck businesses.
New truck business is supported by financial services in many markets. The KION Group has therefore integrated its financial services offering into the truck sales process. In the main sales markets with a high volume of financing and leasing, financial services are handled by legally independent financial services companies. Their activities include the internal financing of the brand companies’ short-term rental fleets and long-term leasing to customers.
Many financing agreements are linked to service contracts. Financial services are therefore a further cornerstone of the service business within the integrated business model.
In the reporting year, approximately 50 per cent of revenue from new trucks involved some form of financing via KION companies, external banks or dealers.
An installed base of some 1.2 million trucks worldwide enables the KION Group to run a high-margin service business. The service business strengthens customer relationships and therefore contributes to new truck sales.
This requires an extensive global sales and service network. The KION brand companies have more than 1,200 outlets staffed by almost 13,000 service employees in over 100 countries worldwide. Approximately half of them are employed by the KION Group. In other cases, the Company relies on external dealers.
In established markets, services are often provided in the context of leasing arrangements and are agreed over the entire term of the lease. There are also individual orders for repairs and maintenance work as well as for spare parts.
In addition, the KION Group looks after entire customer fleets, using special fleet management software to monitor the trucks in the fleets.
In the year under review, 26.1 per cent of consolidated revenue was attributable to services in connection with maintenance, repairs, fleet management and spare parts.
The service business is complemented by rental truck and used truck business, allowing peaks in capacity requirements to be met and customers to be supported after their leases have expired. Trucks can be rented on a flexible, short-term basis, for example. This business is integrated into the LMH and STILL segments in terms of its operations and is financed internally by Financial Services.
Once a lease has expired, the truck is serviced at a reconditioning centre before being sold as a used truck.