Volvo Trucks president Claes Nilsson talks Middle Eastern markets
Claes Nilsson, president of Volvo Trucks, discusses the manufacturer's business performance in the region and its rollout of assistive safety features in the Gulf
It has been a decade since Claes Nilsson, president of Volvo Trucks, was last in the Middle East — and that decade has seen significant challenges and opportunities, both globally and within the regional heavy commercial vehicles segment.
Volvo Truck is the largest business area for the Volvo Group, and globally it sold almost 103,000 trucks in 2016. The manufacturer’s support network covers 128 countries through more than 2,000 dealers and it has production facilities in 15 countries worldwide.
In the Middle East, Nilsson notes: “We are growing rapidly in construction, and we sold 40% more construction trucks in 2016 than in the year before. The FMX is a very popular truck in this region, and since the series was launched in 2010, we have now sold more than 60,000 of the trucks globally — so it is fair to say that we have never had a better offering in construction than we have today.”
Volvo Trucks customers in the Middle East in turn receive support of more than 59 service contact points across the 14 countries in the region where the manufacturer has distributors, and Nilsson notes: “So we are able to support our customer within the region. We also have three factory facilities in the region: in Saudi Arabia, in Iran and in Iraq.”
The Saudi plant is an assembly operation run by Arabian Vehicles & Trucks Industry, a joint venture between Zahid Tractor & Heavy Machinery and Volvo Trucks, and is located in the Industrial Valley of King Abdullah Economic City, to the north of Jeddah, and rolled out its first Volvo trucks in June 2015.
The facility in Iran was established 35 years ago, in the 80s, and entails not just assembly, but full cab manufacturer and painting, while the Iraq plant has also been in operation for more than a decade.
Looking at the big pictures, Nilsson points to the presence of three facilities in the Middle East, out of a total of just 15 production operations worldwide as evidence of the investment made by Volvo Trucks in the region. He says: “I only shows that, long-term, we believe in these markets.”
As for the present, he continues: “We have a leading position in Saudi Arabia, the UAE and Oman, and we are doing a good job with our business partners in Qatar and Eqypt. We are ready to start the business when Iraq will come back, and we can see the first good signs from this country. We have a very long history and see a good business trend in Iran, so that is one of our core markets.”
Now, in 2017, Volvo Trucks is launching its full range of safety features in a series of customer events that began in Saudi Arabia with a truck roadshow, and which are continuing over the course of the second half of 2017 in the other Gulf countries and across the Middle East and North Africa.
Safety and savings
These features range from passive to active safety systems, and include: automatic traction control, an all-wheel-drive; rear air suspension; tandem axle lift, which is available on any 6x4 trucks with air suspension; and Volvo Dynamic Steering, which works with disc brakes.
Not all of these safety features are expected to hold immediate appeal to the majority of fleet operators in the region, and Nilsson notes: “Customers in the Middle East prefer leaf suspension over rear air suspension, and they prefer drum brakes over disc brakes.”
But he continues: “Our intention is not to deliver these features tomorrow as standard in the trucks, but we will do our best to explain to our customers and suggest why they might like to introduce these features.”
Volvo Trucks is also offering active safety systems in the form of its collision warning and emergency brake system, as well as lane-keeping support functions — both of which are a legal requirement in countries in Europe, with the UK mandating them since November 2015.
Nilsson once again compares the comparatively low cost of the features, at roughly $3,400 to $4,500 for the total package in Europe, to the manifold benefits in terms of safety and reduction in insurance premiums.
He explains: “It’s nothing compared to the safety it brings in, for the customer and society. The business context does not always support such introductions, but we are receiving a lot of enquiries about it in Saudi Arabia. We closed 300 units at the beginning of the year with a big fleet in the country thanks to these features.
“In Saudi Arabia, safety is one of the big issues, and we are seeing success with large fleet customers with more than 1,000 trucks — after spending just a few weeks with them — because everything relates to safety and cost for them, and safety features allow them to reduce their insurance costs. So it’s not standard, but we are doing our best with our sales network to suggest our customers think about it.”
In 2016, Volvo Trucks also introduced crawler gears with the I-Shift automated manual trans-mission. These crawler gears are most in their element equipped on heavy tractors, where they allow operators to undertake tricky tasks, including steep inclines and even hill starts, with loads of well over 100 tonnes.
He adds: “So far the uptake has not been that big in the region, since it has a price tag, but it’s about convincing the customers that they will get it back in the long-term: they will be able to have a lower fuel consumption, and you simply cannot have a faster ratio.”
As for the I-Shift at large: of the trucks that Volvo Trucks is now shipping to the Gulf and Maghrib regions, 100% are equipped with the I-Shift automated manual transmission.
Overall, the heavy trucks market is down, with Nilsson estimating that Volvo’s sales have dropped from 2,000 to 3,000 units in previous years to 1,200 today, but, he adds: “Even in this downturn, our relative position has strengthened — so our market share in most of the countries has grown, and it’s full steam ahead.
“We believe in this region in the long-term, and that is why we have invested quite a bit together with our different partners in different countries. Even if we’ve had a bit of a downturn in this region in the last few years, it doesn’t stop us from continuing to believe and invest in this region for the future — because we know that it is a cycle: the market will come back.”