VOLVO TRUCKS SA – Innovation, Efficiency, Dependability Results in Market Dominance

The Volvo brand is perhaps one of the world’s most trusted and standout when it comes to delivering on its promise – pioneering innovations that put people first, built on quality, safety and care for the environment.

Since 1927, the Swedish automaker has carved out market share alongside the world’s largest players and employs some 105,000 people around the world generating revenue of more than $44 billion in 2019.

In 1999, the passenger car operation of Volvo was sold to Ford before moving under the Geely Holding Group umbrella in 2010. This left the Volvo Group solely responsible for production, distribution and sale of trucks, buses and construction equipment along with other ancillary products and services.

Volvo Trucks is an industry leader, boasting many innovations and world firsts for its range of medium to heavy duty trucks. The trucks division of Volvo is services by 2100 dealers and 15 assembly plants across 130 countries.

In South Africa, Volvo Trucks was established 20 years ago. Previously, the brand had been imported and distributed by strategic partners but the company saw the potential in the country and set up shop on 13 February 2000.

After building a strong presence in South Africa, Volvo Trucks now offers up a range of high-quality options. The FH16, FH, FMX and FM are all extremely popular because of their reliability, strength, quality build and safety credentials.

Unfortunately for Volvo Trucks, the South African economy has been under extreme pressure for a number of years with several factors combining to create a lack of business confidence and a slowdown in investment spending. A truck from Volvo is a relatively high capital outlay and, even for the biggest businesses, when times are tough in the country this type of spend can often slowdown as organisations look to consolidate and perhaps make existing fleet last another year.

However, Volvo Trucks is a company that has navigated challenges many times before. The company is built on the reputation of overcoming difficult situations in harsh environments.

SA’S NUMBER 1

This was proven at the start of the year after the National Association of Automobile Manufacturers of South Africa (NAAMSA) released statistics showing Volvo Trucks market share at 23.2% for 2019.

Selling 3206 in South Africa and other African countries in the past year, Volvo Trucks grew its market share by 4.8% on 2018’s figures to claim the number one position in the industry.

With meaningful growth not expected to return to the South African economy in 2020, this was welcome news for Volvo Trucks and Vice President of Volvo Group Southern Africa, Marcus Hörberg who said: “Our customers and our staff are the main driving force behind everything we do. We believe that the quality of our products, our staff, service, parts and support, played a central role in increasing our market share. We will now work even harder to keep the trust our fleet owners have placed in us.”

The company’s units are assembled in Durban and distributed around South Africa and across the border into neighbouring countries including Botswana, Mozambique, Namibia, Zambia and Zimbabwe. 

Hörberg committed to further investment in South Africa saying that the company would spend money on facility improvements, service centres and staff training.

“We are committed to continue increasing vehicle uptime and optimising vehicle utilisation for our fleet owners,” he said. “Aspects like connected services, flexible service contracts and preventative maintenance all assist fleet owners in keeping the wheels of their businesses turning.”

This investment will also help the company to maintain its position as the number one rated manufacturer in South Africa in terms of overall customer satisfaction. In December 2019, Data Track, a local research company that analyses customer experiences of over 37,500 truck and fleet operators in South Africa, confirmed its research shows Volvo Trucks is the top-rated truck manufacturer.

In January 2020, figures from NAAMSA suggested that Volvo’s efforts had been repaid, with the company selling 207 units in the extra heavy commercial sector (27.3% of the total), 73 units in the heavy commercial sector (26.3% of the total), and three units in the bus sector (10% of total). These figures represent a total of 26.6% market share in the sectors that Volvo Trucks is active in the first month of the year.

FLEXI-GOLD

In October 2019, Volvo Trucks announced the roll out of its new service contract, already established in some European markets, across South Africa. The Flexi-Gold plan is aimed at companies that need flexibility and adaptation based on markets and demand.

The idea of the usage-based Flexi-Gold contract is for hauliers to pay monthly fees, broken down into fixed and variable parts (km-based) tailored to the truck’s actual mileage. Through advanced telematics technology, vehicles communicate effortlessly with Volvo Trucks and provide information regarding actual usage which helps to account for fluctuations in seasonal demand – a big factor for those working in agriculture and construction.

“The rapid development of connected services gives hauliers completely new ways of increasing vehicle uptime and optimising vehicle utilisation. By adding flexibility to the payment model, we add another dimension to our offer. A pilot project for this new usage-based service contract has already been successfully implemented locally and will now be available for South African customers,” said Theunis Eloff, Aftermarket Director of Volvo Trucks Southern Africa. 

The contract is different from what is currently available from Volvo and the rest of the market, and provides customers with a 40% flexibility span, where annual mileage can exceed or go under the agreed mileage by 20%. This, combined with no extra invoicing paperwork, brings a much more flexible offering to clients.

“Many transport companies have short-term agreements with their clients or operate in unpredictable and fluctuating markets. They express a need for greater flexibility when it comes to service contracts. We now have the technology to make dynamic and connected solutions like this possible,” said Thomas Niemeijer, Business Development Manager, Service Contracts, Volvo Trucks.

“Quite simply, if you drive less, you pay less and vice versa. The Volvo Flexi-Gold Contract offers the same coverage and uptime as a Volvo Gold Contract, at the same predictable cost, but with much greater flexibility to adapt to changing business needs,” added Niemeijer.

FH I-SAVE

The nature of Volvo is to be a pioneer. Invention and innovation is in the company’s DNA. And helping to solve problems for clients is what helps to constantly improve the standing and reputation of Volvo Trucks.

Of course, one of the main concerns for hauliers is the cost of fuel. In South Africa, the Department of Mineral Resources and Energy announced in February that petrol prices would decrease by 13 cents and diesel prices would come down by five cents per litre. This small reprieve was welcomed by those in the transport and logistics industry. “Ongoing declines in the price of oil, since the second week of the year, will give South African fuel users a breather for February,” said South Africa’s Automobile Association (AA).

For Volvo Trucks, the ability to save clients money while pushing efficiency is important and so the company announced, in the first half of 2019, the launch of the FH I-Save. This new model boasts the combined D13TC engine with updated fuel-saving features. The result is a 7% improvement in fuel efficiency with no loss of driveability features.

“Volvo FH with I-Save is our answer to this challenge. It is a complete solution that combines our latest technology to substantially bring down fuel consumption in long-haul operations. And this is without compromising drivability,” said Roger Alm, President of Volvo Trucks.

Currently only available in Europe, the FH I-Save will be rolled out further afield if demand is strong. The model is targeted at those who drive more than 120,000 km each year and, with Southern Africa’s extensive road network, this could quite feasibly be the case for hauliers across the region.

UD TO ISUZU

January’s figures for sales, according to NAAMSA, show that part of the Volvo Trucks offering to market included sale of the UD Trucks brand. Part of Volvo since 2007, UD has established its own brand strength and enjoys success across southern Africa.  

But, at the end of 2019, Volvo Trucks and the Volvo Group announced that it would partner with Isuzu Motors to improve efficiencies and develop new technologies, with a part of the deal being ownership of UD Trucks passing from Volvo to Isuzu.

The result will be creation of the best long-term conditions for a stronger heavy-duty truck business for UD Trucks and Isuzu Motors in Japan and across international markets as well as deeper collaboration and technology expertise transfer between the two global businesses.

President and CEO of the Volvo Group, Martin Lundstedt, was positive about the plan, saying: “The Volvo Group and Isuzu Motors have a well-established relationship on medium-duty trucks in Japan based on mutual respect, shared values and win-win spirit. We see great potential to extend our cooperation within technology, sales and service as well as other areas going forward, for the benefit of our customers and business partners. Our UD Trucks colleagues have done a great job to improve performance in recent years and the alliance opens up a great opportunity to continue the successful journey.”

President and Representative Director of Isuzu Motors, Masanori Katayama, agreed highlighting the opportunities for value creation going forward.

“Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two Groups. We intend to derive the full value from each other’s different specialties across product and geographical strongholds. Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution,” he said.

The non-binding Memorandum of Understanding signed between Volvo and Isuzu is expected to be cemented by the middle of the year and completed in a binding format (subject to relevant approvals) by the end of the year.

The long-term impact on the business in southern Africa will take time to filter through, but Volvo Trucks has proven on so many occasions to be resilient and powerful and the likelihood is that things will continue as normal.

While Volvo Trucks continues to dominate market share and putting world-class products and services into the market, customers will continue to come. In South Africa it’s clear, Volvo Trucks is reliable, trustworthy and innovative, delivering everything you could need, and more, while moving around the country.