2.2.3 Service business improves customer retention

The scope and quality of the services offered is a key factor for many customers when they select a technology partner. That is why the service business is more than just a good source of revenue for the KION Group. It is also an important means of improving customer loyalty. Besides classic aftersales business such as spare parts sales or maintenance and repairs, the services offered by the KION Group include higher-value services, for example the complete planning and organisation of automated logistics processes. Along with these services, customers can also request IT solutions that enable them to manage their truck fleets and material flows reliably. This gives customers a rapid yet detailed overview of all their major performance and consumption figures and of the running costs for their fleets.

In 2011, service accounted for 42 per cent of revenue (2010: 46 per cent). This slight percentage decline is due to the disproportionately strong rise in the new trucks business on the back of the recovery in the industrial truck markets. The KION Group divides its service business into aftersales services, rental business and the used trucks trade. The 'other' product category also includes services such as consultancy, IT solutions and warehouse equipment systems.

Breakdown of revenue in 2011 (pie/bar chart)

Aftersales service levels tailored to customers' needs

The extensive dealer and service network enables the KION Group to offer its customers repair and maintenance services worldwide. The KION Group employs some 7,600 service staff, of whom 6,000 are service technicians. In places where the KION Group does not have its own staff, external dealers provide the aftersales services in accordance with the KION Group's specifications. Customers can access the service organisation of all KION brands round the clock. In Europe, spare parts are mostly guaranteed to be supplied within one working day.

An active fleet of currently over one million trucks plus the increasing presence of the KION brands worldwide provides a sound basis for the future growth of the KION Group's service business. To enable customers to budget for their service costs more accurately, the KION Group brands usually offer service contracts. Customers can decide on the scope of the services they require to meet their individual needs. For example, they can take out a contract that covers regular maintenance, a defined number of ad-hoc repairs within a defined response time and the replacement of any wearing parts required during the year. The KION Group also offers a wealth of finance, leasing and rental solutions so that it can fully cater to customers' varying needs at all times.

Used trucks open up new customer groups

Many customers opt to rent industrial trucks. As a result, used trucks come onto the market once the leases or fleet management contracts have expired – provided they are not extended or renewed. For customers interested in quality trucks at an affordable price, these high-quality used trucks offer an attractive alternative to new trucks from other providers with less sophisticated technology. Selling a used truck from the KION Group also opens up the possibility of future orders for new trucks.

The KION brands naturally offer aftersales services and financial services for the used trucks. All used trucks are reconditioned to ensure that they will operate properly once they have been sold to customers.

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 of up to twelve months
    The KION Group's short-term rental business enables customers to meet short-term requirements such as seasonal spikes in demand. The term of the rentals offered 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, including a comprehensive selection of products and services
    Long-term leases run for an average term of four to five years and usually cover 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 lease, the customer returns the truck, extends the old lease or signs a new one.
  • Customised fleet management particularly attractive to big-ticket customers
    Fleet management is the most flexible form of leasing and is becoming increasingly popular with big-ticket customers. The KION Group takes on the comprehensive management and financing of customers' truck fleets and ensures, among other things, that trucks can always be used optimally. Fleet management includes analysing and optimising how the trucks are used and the methods used to replace old trucks that no longer meet requirements. 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.

Increasing importance of financial services as a sales function requires separate management structure

Around 60 per cent of the KION Group's total unit sales of new trucks are already supported by financial services activities. This segment caters to the increasing demand for one-stop solutions that, in addition to the trucks themselves, include finance and other services.

In 2011, the KION Group's leasing portfolio grew to a total of 230,500 trucks. This equates to a replacement value of €4,528 million as at the end of 2011. The core markets France, Germany, Italy, Spain and the United Kingdom accounted for 74 per cent of the total leasing portfolio at the end of the year under review. In the key markets, the proportion of the portfolio accounted for by long-term leasing declined slightly compared with the proportion at the end of 2010 to around 80 per cent.

The Financial Services (FS) segment encompasses key cross-brand functions for the two brand segments Linde and STILL. In terms of promoting sales and customer loyalty, it represents an important vehicle which the KION Group will be exploiting even further in the future.

The first separate FS companies were established in the core markets of the KION Group in 2011. Further countries with a high proportion of finance and leasing business will be integrated gradually.

The increasing importance of the FS segment is also reflected in separate management and control of the financial services business. (For more detailed information on the future segment structure, please refer to section 4.3 of the management report and to the notes.) The cross-brand FS segment brings together all the KION Group's services in connection with financing of short-term rental fleets and long-term leasing business by providing innovative and tailored finance solutions.

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