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Daimler’s Richard Howard Envisions Transformation of Truck Financing
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As technology continues to transform the commercial truck market, Daimler’s Richard Howard sees a similar evolution underway on the financial services side of the industry.
Howard, who in May became president of the newly established Daimler Truck Financial Services USA business unit, said data and digitalization are enabling new forms of truck financing, leasing and insurance that can be tailored to meet customers’ specific needs.
That trend will only accelerate with the expansion of connected-vehicle technology and the emergence of zero-emission trucks and autonomous driving, all of which will have “a big influence on the financial services of the future,” Howard said during a Jan. 20 interview with Transport Topics.
Before assuming his current role, Howard led the sales and marketing operations at Daimler Truck North America, which manufactures Freightliner and Western Star trucks and Detroit engines. Now he is applying that “unique and really valuable experience” from his seven years at DTNA to his new position as he guides the development of new financial products and services to support those brands.
In the past, the hardware and services sides of the heavy truck business were very distinct, but now the line between those activities is “blurring,” he said.
After undergoing a restructuring process to align with Daimler Truck’s spin off from Mercedes-Benz last year, DTFS is focusing now on product innovation while working together with DTNA “to bring the services of the future to the market,” Howard said.
An early example is DTNA’s dynamic lease offering, which uses connected-vehicle data to match customers’ lease payments to billable miles. This usage-based financing option, first introduced at the 2019 North American Commercial Vehicle Show, utilizes information collected by the Detroit Connect telematics platform embedded in the company’s trucks.
“That’s a great example of where we’re using 24/7 connectivity to drive the variable lease payment based on the usage of a truck,” Howard said.
That dynamic lease option can provide benefits for large and small fleet customers alike while giving them more options beyond the standard 48-month lease, he said.
“We’re moving away from standard profiles to more dynamic profiles, not only in terms of the structure of the lease, but also the payments,” Howard said.
Financial services also are supporting the rollout of battery-electric trucks.
DTFS has dedicated staff working with Daimler Truck’s eConsulting team, which helps fleets navigate the complexities of deploying electric-powered trucks and installing the charging stations needed to operate them.
“We’ll play a key role in the future on both parts — financing electric trucks, but also playing a role in terms of financing the infrastructure for our customers and our dealers as well,” Howard said.
Financial services such as data-driven insurance and dynamic leasing also will help enable the adoption of autonomous truck technologies in the future, he added.
Trucking’s insurance market is another area where data and technology could ease an industry pain point. Howard said a data-driven approach to insurance could help fleets better manage rising insurance rates, which have become a significant headwind for motor carriers in recent years.
“The averaging of risk, which is what many insurance companies do, tends to overprice risk for better customers and underprice risk for maybe not-so-well profiled customers,” Howard said.
In contrast, measuring a fleet’s specific risk profile could provide the customer with the best price and the best service for the company’s application and business context, he added.
Howard said DTFS is working through “proof-of-concept” products with its largest dealer groups today and sees substantial opportunities to help the industry better manage insurance costs in the future.
A Class 8 Freightliner Cascadia with SAE Level 2 automation. (Daimler AG)
To that end, DTFS is working with insurance startup High Definition Vehicle Insurance Group to bring connected insurance offerings to Daimler Truck customers. HDVI integrates vehicle telematics with insurance policies and enables fleets to earn better rates by coaching their drivers and taking steps to improve safety and mitigate risk.
Daimler Truck invested in HDVI through its Series B funding round, the companies announced in August.
In the meantime, DTFS has been working to support customers facing delayed deliveries of new vehicles as ongoing supply-chain constraints continue to slow the production of new trucks.
“We’re extending leases, extending financing, bridging customers through that time frame in any way we can,” Howard said. “We want to keep our customers’ trucks running 24-7 so we’re completely open to all of those needs.”
Looking beyond today’s supply-chain issues, Howard said Daimler Truck’s financial arm is well positioned to “innovate in ways in which we’ve never done before.”
“It’s a great time of change, a great time of opportunity,” he said.
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