Strategy of the KION Group

The KION Group’s strategy is centred on international growth and strong profitability. The aim is to seize the opportunities presented by the attractive conditions in the global material handling market and to comprehensively and sustainably harness them for the benefit of shareholders while managing risk at all times. Building on their leading position in western Europe and in the premium price segment, the companies of the KION Group want to increase their market share in the core markets and in fast-growing markets outside western Europe in future. This is accompanied by a greater presence in the value and economy price segments. The crucial requirement is that they offer superior customer benefits in all regions and price segments. That is why the KION Group is securing its position as a leading technology provider by investing heavily in research and development. It operates cost-efficiently throughout the value chain and applies its solid service model as a global benchmark.

Growth-oriented strategy

1. Continue to strengthen the KION Group’s leading position in western European core markets by investing in research and development

The KION Group is consolidating its position as the number one in Europe’s industrial truck market with customer-focused technological innovations and a high proportion of trucks with customer-specific equipment. In recent years, the proportion of revenue spent on research and development has been above the industry average and stood at 2.5 per cent in the year under review. The KION Group aims to increase customer benefits in all price segments by introducing innovative drive systems, advanced ergonomics, intelligent intralogistics solutions and more.

2. Expand the range of services in European markets and in growth regions

The KION Group is continually extending its portfolio of services and improving their quality at every stage of the product lifecycle. This includes servicing, maintenance and spare parts as well as fleet management solutions, intralogistics processes, efficient supply chains and IT systems. Financial services are also a key component of the service portfolio. The KION Group has an installed base of around 1.2 million trucks from which to expand its service business. The Company also intends to increase its market share by, for example, opening additional service outlets in attractive growth markets and stepping up the short-term rental business. It is expanding its service business in the major sales region of China, where service revenue has more than doubled since 2008 and now accounts for about a quarter of total revenue in China. The target is for service business to continue to contribute approximately 40.0 per cent of revenue over the next few years. This will stabilise business performance, reduce susceptibility to economic downturns and boost profitability.

3. Harness the full market potential of growth regions

The KION Group wants to take full advantage of buoyant demand in the BRIC countries (Brazil, Russia, India, China) and other emerging markets. Another focus is the North American market, which offers comparatively high growth potential. That is why the Company is launching region-specific products in the value and economy segments and strengthening its local production and sales network. To achieve its strategic objectives, the KION Group is making targeted investments in production capacity, product development and the sales and service network. It also continually analyses the market and, if necessary, weighs up whether to acquire other companies. The strategic partnership entered into with Weichai Power has already begun to strengthen the KION Group’s position in China and is expected to help in harnessing the potential of other Asian markets, while Voltas MH is opening up access to the Indian volume market.

The range of products and services is tailored to region-specific requirements. To this end, the KION Group operates a multi-brand strategy in the different regions. Region-specific products based on low-cost product platforms are the preferred option in the emerging markets of Asia, Central America and South America, where the Baoli and Voltas MH brand companies play a key role. Other external opportunities for growth are examined on an ongoing basis, including in relation to the sales and service network.

Efficiency-oriented strategy

4. Optimise production and thereby reduce costs

Over the past few years, the KION Group has streamlined its production capacity in developed markets, bringing about improvements to capacity utilisation and cost efficiency. At the same time it has created new capacity in Brazil, India and China. The aim is to continue to monitor the degree of inhouse production as well as to increasingly manufacture trucks locally to serve the emerging markets. The same is happening with product development, particularly for the value and economy price segments. The development site in China, which was expanded again in 2013, is playing a key role here.

5. Leverage groupwide synergies

Although the brand companies in the KION Group are largely responsible for their own market activities, the KION Group harnesses groupwide synergies and uses resources efficiently by centralising certain functions. Central departments are responsible for purchasing, quality and production control, logistics, financial services and IT. This makes it possible to establish best practice across the Group. In product development, a cross-brand, cross-regional modular and platform strategy enables a greater number of common parts, bringing advantages in terms of product costs and development costs yet retaining distinct identities for each brand.

6. Continually improve operational performance and robustness

There are also a number of research and development initiatives aimed at cutting costs, improving quality and speeding up the development process. The KION Group also adapts products to country-specific requirements so that they can be launched successfully in those countries. Over the next few years, it plans to increase its purchasing volume from emerging markets from 26.9 per cent in 2013 to as much as 40.0 per cent. The strategic partnership with Weichai Power will contribute to this significantly.

Processes in all functions are also constantly analysed to identify potential for improvement. STILL, for example, restructured the back office of its regional branches in Scandinavia after conducting such an analysis.