Volvo Trucks talks about its business in 2014
James Morgan joins Mercedes-Benz to test its off-road line-up across 18km of the UAE's toughest desert
Claes Nilsson, president of Volvo Trucks, shares his thoughts on quality versus cost and the rise of telematics, whilst looking back on the Swedish heavyweight’s global performance in 2014
The Middle East is an extremely important market for Volvo Trucks, according to the automaker’s regional president, Lars-Erik Forsbergh. Throughout the course of last year, he highlighted the fact the region – with some of the roughest, most demanding off-road conditions in the world – offers the perfect environment in which to test trucks.
Speaking in Abu Dhabi at the launch of Volvo Trucks’ latest range for the Middle East – the FH, FM, and FMX – Forsbergh asserted that the these vehicles, which have been extensively road tested in Oman and Saudi Arabia, provide an unbeatable transport option for fleet owners. And this is a sentiment with which Claes Nilsson, president of Volvo Trucks, wholeheartedly agrees.
“Owning a Volvo offers certain benefits, and customers rely on Volvo to do the job in places like KSA where drivers are transporting extremely heavy loads in very high temperatures on challenging roads,” he said.
“There is a huge demand for quality in this part of the world due to stress on the product. If we have quality for the toughest environments and most demanding type of transportation, which I think we can find in Saudi Arabia, it helps us to be better at Volvo.”
Nilsson is upfront about the fact that this means Volvo Trucks don’t come cheap.
“Our ambition is to have the best products in the market that give our customers the best productivity and uptime, so with that in mind, we will never be the most inexpensive product. We will always ask for a premium and work with customers who prioritise quality, requiring high payload and high mileage,” he explained.
And while the Middle East is a market often said to be sensitive to upfront costs, and tough on negotiation, Nilsson confirms that Volvo is doing very well in the region: “As a brand, we are very attractive here,” he commented.
Continuing the theme of getting what you pay for, Nilsson points out that a heavy-duty Volvo product is two-to-three times as expensive as a similar vehicle manufactured in China – a territory in which Volvo Trucks is more of a niche player than the go-to brand.
“Chinese manufacturers are very strong with huge volumes, mainly in the domestic market,” Nilsson said, before revealing that his company is open to the possibility of creating a joint venture with a manufacturer from China. However, he made clear that this will only happen if the right balance can be struck between quality, performance, and price.
In terms of how 2014 shaped up for the company, Nilsson revealed that Europe was a mixed picture, with the northern and eastern countries performing well whilst southern nations, such as Spain, Italy, and Portugal, reflected their struggling economies.
“All in all, Europe is staying at a pretty good level, though it’s not fantastic,” he reported. “Our business in Africa and the Middle East was good [in 2014] and North America – especially the US – was in recovery from very difficult business-climate years, both in terms of the total market and Volvo’s position. South America, even though the economic climate was worse than in 2013, held up well.”
At the time of our interview in late November, Nilsson reported that 2014 was on track to be the second best year ever for Volvo Trucks in South America, confirming that this market is an important one for the company, having been present in Brazil for more than four decades.
At the other end of the spectrum, much like in China, Volvo Trucks is “a niche brand” in wider Asia, although Nilsson attributed its improved position in 2014 to the company’s overhauled product range.
“It started with the new FH in Europe in September 2012,” he comments. “We have had extremely good feedback from our customers, in terms of performance, quality and how drivers perceive them. And since then, we have launched the new products in different markets,” he stated, with the final piece of the global roll-out jigsaw being South America – a region poised for further growth and significance in 2015.
Moving onto talking about the global need for greater investment in infrastructure, Nilsson said: “The better the infrastructure, the better our customers can utilise the benefits of our products. In markets where you have very bad infrastructure – like India, where we are very niche – it’s difficult for our customers to do this.
“In terms of the Middle East, the infrastructure is developing in the UAE and Saudi Arabia at a quicker pace than in many other parts of the world, which definitely helps us; though of course, there is always the need for more [investment].”
One important driver behind sales, especially for a premium brand like Volvo Trucks, is effective communication in terms of total cost of ownership (TCO). It has been reported that the GCC region has progressively become more concerned with cost per kilometre or per hour than initial outlay, representing an evolution in the regional mindset.
In July 2014, Volvo Trucks’ transport solutions development manager for the Middle East, Ian Drury, said that he had witnessed “a shift in attitude towards a more TCO awareness and attentiveness among the big fleet owners” during recent years.
Nilsson reiterates this: “An increase in concern about TCO is a global trend we’re seeing. The cost of different items varies across different parts of the world, so of course, the cost of fuel and the driver is much higher in Europe than it is in the Middle East. Therefore, what is important is different. You have to see you have the best possible offer for different markets. Our customers in the Middle East are very careful about the cost of ownership.”
They are also increasingly interested in telematics, as Nilsson discusses: “Telematics is an extremely fast-developing area and for many years, we have been working with our own integrated type of telematics that we call Dynafleet, which includes everything from supporting the maintenance of the trucks to fuel consumption, driver time regulations – which is a big thing in Europe – and communicating between the logistics centre of a company and the trucks.
“In our new range of products, which are more sophisticated, we see huge potential in telematics. In Europe we offer what we call a Volvo Gold Contract, which guarantees the best possible uptime.
Included is a full service and maintenance agreement that includes a provision whereby the dealer can monitor trucks on the road and inform fleet managers that they should visit the workshop before the user knows that they need to – in effect, identifying a problem before it even is a problem. It’s about being proactive. In this field, there is so much you can do in terms of communication between the truck, the customer’s logistics centre, and Volvo.”
Safety goes hand in hand with telematics, and Nilsson says the driver’s operating environment is crucial in this respect.
“Our customers see the benefit of having drivers who are alert and efficient, so we spend a lot of time making the environment as good as possible for the diver, not only from a productivity point of view, but also from an emotional point of view. We ensure a nice environment when sleeping as well as when driving. As well as improving safety, this strengthens the relationships between the transport company and end customer; a rested and alert driver gives a good impression to their employer’s clients.
“[In countries where] there is a lack of skilled drivers, we help our customers attract the right personnel. People want to drive a Volvo rather than a competitor,” Nilsson concluded.
Three’s a crowd pleaser
The FH, FM, and FMX range of Volvo Trucks introduced a raft of innovative features to the Middle East last year, such as Volvo Dynamic Steering, which Volvo says delivers handling comparable to a car’s in all operating conditions, and intelligent I-Shift gearbox technology.
Over a two-week period, more than 1,000 VIP customers from across the Middle East and Africa visited the specially created Volvo Village at Abu Dhabi’s Yas Marina Circuit to discover three new models that, combined, constituted the Swedish truck maker’s most significant development for a generation.
The Volvo FH has been Volvo Trucks’ flagship model for almost 20 years, accounting for more than 60% of the firm’s total sales. The latest version quickly made its mark, being named International Truck of the Year 2014.
The new Volvo FM is described by the company as “taking reliability and productivity to the extreme”, and rounding off the regional trio is the robust Volvo FMX, built for off-road applications.
“Our latest trucks are the result of huge investment in R&D, new technologies, and aerodynamic designs. These innovative solutions have a clear purpose: to help improve truck productivity and durability, and consequently customer profitability, whilst making life safer and more enjoyable for the driver,” commented Lars-Erik Forsbergh, president of Volvo Trucks for the Middle East.
Volvo Trucks Middle East: 2014 sales analysis
Volvo Trucks might be an archetypically Swedish brand, but the firm claims its vehicles are as comfortable operating in the desert as they are amongst their native fjords. If the automaker’s Middle Eastern sales results for 2014 are anything to go by, this certainly appears to be the case, as PMV reports.
Volvo Trucks Middle East saw a 24% increase in deliveries last year, compared to 2013. The regional division also reported year-on-year parts sales growth of 27% across its 13 active Middle Eastern markets.
These are impressive numbers, especially considering it was less than 12 months since the manufacturer launched its overhauled range for the territory. Volvo’s redesigned FH, FM, and FMX models – unveiled at Abu Dhabi’s Yas Marina Circuit during the first quarter of last year [March 2014, PMV] – have certainly made a solid first impression with local fleet operators.
Indeed, Volvo Trucks Middle East says that its overhauled range has played a significant role in this rapid growth. The firm has also benefitted from a resurgent regional construction industry, with heavy governmental investment and diversified market drivers.
The brand’s flagship model, the FH, has continued to lead the field in terms of sales. Volvo’s long-haul stalwart proved as popular as ever in the UAE, Saudi Arabia, Oman, and Iraq, and accounted for more than 70% of the company’s overall regional sales. The UAE and Iraq demonstrated the highest individual percentage growths, with increases of 49% and 67%, respectively.
Amongst the most significant deals to be completed last year was a delivery of 250 FH 4x2 tractor heads – equipped with I-Shift gearboxes – to a major construction firm in Dammam, KSA. Meanwhile, 100 I-Shift-fitted FH 6x4 tractor heads were delivered to an outfit in Dubai, UAE. In Muscat, Oman, an order for 80 trucks was completed, comprising a mixture of FH 6x4 tractors and 8x4 concrete mixers.
Volvo’s off-road tough guy, the FMX, proved popular in Iraq, with 282 units being delivered to Baghdad Municipality. This order included a combination of 6x4 and 4x2 rigid-framed units equipped with superstructures ranging from vacuum tankers to garbage compactors. A further 100 FH 6x4 tractor heads with general-cargo, flatbed semitrailers, were delivered to the country’s Ministry of Transport.
“2014 has been an extremely important year for Volvo Trucks Middle East,” said regional president, Lars-Erik Forsbergh (pictured above).
“We began in January with the launch of our incredible new range. This was followed by the introduction of our flexible financing options in an effort to support the region’s surging industry.
“We also optimised our transport solutions around the new models to provide our regional customers with the best the market has to offer in terms of care packages that help increase productivity and truck efficiency,” he added.
In addition, Forsbergh contends that Volvo Trucks Middle East’s 2014 performance reflects the solid foundations that he and his team have laid for long-term growth in the region.
“The ongoing development of the Middle East truck market makes it a key focus for Volvo Trucks, and we will be building on this year to reach our goals of double-digit growth for 2015. The new FH, FM, and FMX models, and the solutions we offer our customers, will continue to help us to do that as they offer the highest possible standards of reliability, handling, robustness, fuel efficiency, safety, and driver comfort to our Middle East customers,” he said.