2016 must have been a suspenseful year for the Volvo Trucks Australia organisation and local parent company, Volvo Group Australia (VGA). After climbing to the top of the truck sales leader board in 2015, the Group found itself in the position of the one being chased for the first time – with MAN, Mercedes-Benz and Kenworth regrouping in the background for a collective attack on the heavy-duty crown in 2017.
Despite the competition being caught up in a drawn-out innovation arms race, however, the Swedish conglomerate decided to zone in on industry intelligence instead of letting the pressure get to it, hoping that taking on a thought leadership role in the wider commercial road transport space would help it gain relevance beyond sales performance alone.
VGA President Peter Voorhoeve first articulated the strategy in an interview with Prime Mover in April 2016, saying the company had arrived at a stage where it wanted to “engage with the trucking community at a larger scale” and add value beyond its product and service offering alone.
“After assuming market leadership with a combined share of 26.2 per cent, I think now is the time for us to give back to an industry that has given us so much in return,” he said. “With one in four trucks in Australia now coming from us, we have a responsibility to help industry understand the real extent of the recruitment problems we are about to face.”
To do so, VGA commissioned an independent research project to find out just which challenges a qualified sample group of leading fleets is currently facing in regard to driver recruitment and image. What followed was an unprecedented investment in driver education, culminating in the donation of a 700hp Volvo FH16 and a 685hp Mack Super-Liner to heavy vehicle driving academy, the Pilbara Heavy Haulage Girls (PHHG), as well as a Mack Granite cab-chassis to TAFE Queensland SkillsTech.
To also support the skills and education message at the ground level, VGA joined forces with Toxfree in May to launch the Stop, Look, Wave child safety campaign, a program aimed to educate young pedestrians on how to behave around a commercial vehicle that will continue to be rolled out in 2017.
To understand just how impactful VGA’s 2016 strategy has been from a whole-of-market perspective, and where it left off the Volvo Trucks brand for the season to come, Primer Mover spoke to Claes Nilsson, Executive Vice President Volvo Group and President Volvo Trucks, during a brief end-of-year visit to Australia in November.
Q: Coming to Australia must be a positive experience for you after the local VGA team was able to defend the top position on the accumulated sales leader board. How does chasing the number one spot fit in with the broader, more education-focused Volvo Trucks strategy, though?
A: You’re right, it’s not all about where we stand on the sales ranking. What we’re really trying to achieve is being the number one in the eyes of our customers. I’m not saying that we don’t want to be number one in terms of size or market penetration, but we want to lead the pack in terms of desirability. It’s more about customer focus, having the right service, the right people that our customers want to do business with. We want to see our customers make more money by using Volvo Trucks and the services around Volvo Trucks. That is the priority, being the best in the eyes of our customers.
Q: Are you happy with how VGA is performing locally?
A: I represent the Volvo Trucks brand, and from that perspective, I am very happy. What we have done in terms of market share is world class, and it’s extremely pleasant to see how high our customer satisfaction is. On top of that, we make a decent amount of money in Australia. I’m not complaining about that, of course, but it’s important to understand that we need to make money here so we can reinvest it locally in Australia. So are our partners, our dealers right now, and that is very impressive to see.
Q: Seeing your dealer network expand and actively invest to be able to represent VGA here in Australia must be an enormous vote of confidence?
A: It is. Seeing our partners invest just as much as we are investing is really exciting. I think it’s fair to say that Australia is setting a great example globally from an internal Volvo Trucks perspective. We’ve really tried to do what is best for the customer and we are convinced, all of us, that our strategy will be good for the customer as well as us. That’s a real achievement.
Q: It’s interesting that you’re still not hiding the fact that there is still money to be earned in Australia, especially if you think about the density of OEMs in the marketplace.
A: It’s a ridiculously busy marketplace.
Q: Why do you think that is?
A: From a Volvo Trucks perspective, I must say it’s because there is good business to be made. As I said, we are making a decent margin here. It’s also quite a prestigious market, but more importantly, it’s a key market in terms of product development for us. The road conditions are tough, the loads are heavy, the heat exposure enormous. When we develop new things, we constantly use Australia as a testing ground for new features, so for us, that’s important reason to be here. But that’s not true for everyone. Looking at all the new entrants, and all the brands that have very low market shares and don’t invest much locally, you have to ask yourself why everybody is here.
Q: Some of the more established brands are eagerly waiting for 2017 to compete for the heavy-duty crown. Do you feel under pressure with the current FH model, which came out locally in 2013 and a year earlier in Europe?
A: No, in fact I think we had a bit of a head start in the heavy-duty category as we’ve continued to refine the FH. I’d like to think we’ve always had a philosophy of introducing the latest technology as quickly as possible here in Australia after we’ve shown something in Europe. Of course there is always a period of testing and local verification, but with our local manufacturing facility, we have all the resources we need to do that quickly – just look at the introduction of the crawler gear in 2016. That’s why the FH will still be competitive. Honestly, I don’t think we have ever had a better product offer for different types of segments than we have today.
Q: What’s interesting here is that we’re now talking more and more about functionality improvement and application-based fine-tuning, whereas in the past, a lot of the Volvo narrative revolved more broadly around safety. Have you made so much progress in that area that you can safely say you’re owning the space to a degree where you can focus on other areas instead?
A: Not really, I think we need to cover every aspect of the market continuously. We can never relax on safety, especially with what’s happening around connectivity etc. There is always more to be done in the safety field, primarily from an active safety point of view. In terms of passive safety – which means having a crash-resistant cab and keeping the driver as safe as possible in an accident – we’ve always had the lead, and we’ll continue to have it. But we’ll keep spending a lot of money on active safety too, while also making our equipment user-friendlier on the functionality side.
Q: Speaking of technology: MAN has opted to only bring Euro VI engines into the market for the TGX D38 – the brand is completely dropping Euro V in the new model. What’s your view on the emissions standards debate?
A: I think it’s up to the local team to decide on what’s needed here in Australia, we can provide both. We know that some customers want to at least test Euro VI, especially in the waste industry, and we will certainly cater to that. At the same time, Euro VI is more complex and pricey technology, and it means you can carry less fuel, so we are conscious about that as well. It’s always a balance: Euro VI might make sense in the city at slower speeds, where environmental friendliness is especially important. But in road train applications, it may be a different calculation. What I haven’t mentioned yet is that 55 per cent of the market still run on ‘Euro nothing’, so if we want to do something about climate change, we need to make sure that we get rid of these vehicles.
Q: Apart from that ongoing debate, how do you feel about the Australian transport industry at large? Where do you see it in comparison to the rest of the world?
A: I have a lot of respect for the Australian transport scene, which I think is very open to new ideas – just think about the advent of the B-double a while back. Now there is PBS (Performance-Based Standards, ed.), which means Australia’s commercial road transport scene may well be one step ahead of the rest of the world in terms of productivity. There is also a growing openness towards new technology and a remarkable service attitude within the transport community.
Q: That’s quite the statement. Can you elaborate on that?
A: Sure, we’ve only just talked about that with our dealers here in Australia. What we’re seeing across the board is that our customers are changing. They are adding more and more value to their customers’ operations, and act more and more like logistics companies in doing so. In fact, some of our more advanced customers are already talking about looking into other business models than the traditional one that we have today. They are providing a service to their customer, and therefore they’re now looking to us as a service provider delivering a transport capacity instead of just several tonnes of metal.