Volvo Issues Upbeat Truck Forecast Heading into Fall

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Jack Roberts, Heavy Duty Trucking  /  July 13, 2017

By day’s end, with the new VNL launch behind them and the cocktail reception kicking off, the mood among Volvo Trucks North America executives was positively jubilant.

The press debut of the new tractor had gone off without a hitch. And even more exciting, from the executives’ point of view, order books for the new truck had opened earlier in the day to enthusiastic responses from Volvo customers. And while he declined to give specifics, one Volvo official described the response from North American fleets and dealerships as “phenomenal.”

It was a fitting cap to an upbeat day, which included an optimistic update on the state of the North American truck market for the year to date by Claes Nilsson, president of Volvo’s global truck operations.

Because Volvo is one of the largest truck and engine manufacturers in the world today, Nilsson naturally began by looking at global market conditions, citing the company’s current 17% market share in Europe while noting that Volvo is now the “leading” truck OEM in Russia, with 23% share in that market. The United States remains the largest truck market in the world, he added, with Germany in second place.

South American markets are generally strong, Nilsson said, although demand in Brazil is currently weak. Core markets in Asia and Africa, including South Korea, Japan, and South Africa are also strong – although Nilsson said demand in oil-producing countries is flat.

In North America, Nilsson said Volvo feels the market has flattened out and is looking for upward sales pressure moving into the second half of 2017 – a trend he is confident the new VNL tractor will be able to capitalize on.

Volvo’s North America President Göran Nyberg built upon Nilsson’s comments, noting that a strong labor market in the U.S. and a boost in consumer spending is driving Gross Domestic Product growth, which he said points to a rebounding marketing sector as the year closes out and should lead to moderate growth in that sector in 2018.

Other positive trends cited by Nyberg include low diesel prices as well as a domestic construction market currently at an all-time high level and poised for continued, gradual increases in volumes.

Breaking North American trucking market segments down, Nyberg said Volvo sees increased equipment demands in long haul, regional haul, and construction, while demand for natural gas-powered trucks is holding steady at last year’s volumes.

All told, Nyberg said he predicts a “fairly strong” Class 8 market in North America of around 215,000 units for 2017.

Looking at the state of Volvo’s North American operations, Nyberg said that to date, 93% of new Volvo trucks have been spec’d with Volvo engines, while 91% of those trucks rolled off the factory floor fitted with an I-Shift automated manual transmission. Moreover, Volvo now has more than 120,000 “connected” trucks on the road capable of remote programming to update powertrains and after-treatment systems.

Volvo now has 420 dealerships in North America, Nyberg added, and the company has invested more than $600 million in those facilities and personnel since 2010. This figure includes a recent investment of more than $38 million, which includes the new Customer Experience Center in New River, VA, as well as enhancements to the company’s manufacturing facility there.

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Volvo Leaders Optimistic About Truck Market

Transport Topics  /  July 13, 2017

DUBLIN, Va. — The leaders of Volvo Trucks’ global and North American operations expressed optimism about the second half of this year and into 2018 during presentations for the launch of the company’s new VNL longhaul tractor.

“We believe this market has bottomed out, and we see upward pressure,” Volvo Trucks Global President Claes Nilsson, said about the North American market.

Goran Nyberg, president of Volvo Trucks North America, added that a rebounding manufacturing sector will help lift sales going forward, though he acknowledged that the company is struggling with a high inventory-to-sales ratio.

“We believe that second half of 2017 will be stronger and expect that to carry into 2018,” he said.

VTNA is based in Greensboro, N.C., and the global operation is based in Gothenburg, Sweden.

Nilsson said that while 2017 is the third consecutive year of declining volumes overall, orders through April for the new VNR regional haul tractor are already outpacing full-year 2016 orders for the VNM model it replaces. He said that the United States is by far the manufacturer’s largest market; other key markets include Germany, the United Kingdom, France and Brazil.

Nyberg said that the shifting scope of retail dynamics is providing a lift to the North American regional-haul market. “There is more e-commerce and next-day delivery to customers as opposed to stores,” he said. He also said that strength in the construction industry is helping the regional-haul sector.

“It is a good time to be in the construction business,” Nyberg said.

Not so for natural gas-powered trucks, however, he said.

“Natural gas, it is no surprise, is going sideways, and we expect it to continue to go sideways due to the prices for diesel,” he said.

The U.S. retail price of diesel, trucking’s main fuel, has been below $2.60 a gallon throughout 2017, the Department of Energy’s Energy Information Administration said. Diesel last cleared $3 a gallon Jan. 12, 2015, when it was $3.053 a gallon.

Nilsson said the company’s service and aftermarket businesses have “grown very successfully over the last few years” thanks to the growth of Volvo’s captive engines and transmissions. “That is a much healthier business than it was a few years ago,” he said.

Volvo’s dealer network also is healthier, according to Nyberg, who said since 2010 North American dealers have invested more than $600 million in their stores. VTNA dealers now number 420 “and counting,” he said, including 65 that have opened since 2010.

“We are investing, and our dealers are also investing,” he said. “We have a very strong business and are very optimistic about the future.”

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