Asia - Autumn’s biggest market for Volvo Group truck sales

Orders for the Volvo Group’s trucks were highest of all in Asia during the year’s third quarter, a trend that has remained constant throughout the 2000s except during the financial crisis. “We’ve taken a big leap forward in Asia during the last few years”, comments Pär Östberg, Senior Vice President of the Volvo Group and President Trucks Asia.

While the financial crisis is still weighing heavily on the European and North American automotive industry, some glimpses of light from the east could be seen in the autumn of 2009.
The Volvo Group’s total truck sales in Asia rose from SEK 2 billion in 2002 to SEK 30 billion in 2008. Through the brands Nissan Diesel, Volvo Trucks, Renault Trucks and Eicher, the Volvo Group sold 55,000 trucks on the Asian market in 2008, and the Group’s positions in Japan, India, China, Korea and South East Asia have been consolidated.

The Volvo Group’s largest Asian truck market is Japan, where the market share exceeds 25 percent for Nissan Diesel, which was acquired by Volvo in 2007. The Japanese market has seen some recovery since the financial crisis.
“In addition, Nissan Diesel owns a big part of the network of dealers in Japan, which means that sales in spare parts and service is doing very well”, says Pär Östberg.
The integration of Nissan Diesel is going according to plan.
“The acquisition was expected to produce benefits of scale, saving the Volvo Group 200 million Euro per year after five years (2012) – and these benefits will be achieved”, says Pär Östberg.

South East Asia is also an important market for the Volvo Group’s trucks, with market shares of up to 40 percent in Indonesia, Malaysia and Thailand trough the brands Nissan Diesel, Renault Trucks and Volvo Trucks.
“South East Asia as a whole is interesting to us. We see the possibilities to a powerful expansion in the region, especially in Indonesia”, says Pär Östberg.

One of the Asian markets where the Volvo Groups truck operation has grown the most in the recent years is India. Pär Östberg mentions the alliance with Eicher Motors of India as a successful example. In 2008, Volvo and Eicher Motors founded VE Commercial Vehicles, a joint venture company incorporating all of Eicher’s truck and bus operations and the Volvo Group’s Indian truck sales operations.
“VE Commercial Vehicles is a venture that we are very proud of, and the Eicher trucks have good conditions to grow in the local segment. We also have a strong position in the European segment through Volvo Trucks”, comments Pär Östberg

Volvo’s next big challenge in Asia is to win shares in the Chinese truck market. China currently has the world’s largest truck market, with around 500,000 heavy vehicles sold every year.
“We’re already strong in the European segment. It’s still a relatively small segment, of course; we sell about 1,000 Volvo trucks a year that are manufactured in Europe and shipped over. But we’re aware there are many customer categories in China that are still hidden to us. For example, Chinese banks have recently started using Volvo trucks for secure transports, and we think we can find more customers willing to pay for reliable and fuel efficient European trucks,” comments Pär Östberg.

In addition, the Volvo Group has DND, a joint venture company owned by Nissan Diesel and Chinese Dong Feng Motor Corporation. When the Volvo Group acquired Japanese truck manufacturer Nissan Diesel in 2007, DND was included in the deal, giving Volvo access to domestic production in China. Today, DND makes the Volvo Group the only European truck manufacturer producing trucks under its own brand in China.
“Several European manufacturers are currently trying to enter the Chinese market, and some own shares in domestic companies that produce Chinese brands.  But so far nobody has succeeded better then Volvo. The alliance between Dong Feng and Nissan Diesel has worked very well,” says Pär Östberg.

The Volvo Group is now focusing on developing sustainable operations for manufacturing and selling trucks in Asia. The company has a two-pronged strategy: on the one hand to strengthen the joint venture companies in order to develop competitive products capable of winning a larger share of the domestic market, and on the other hand to increase sales of trucks manufactured in Europe.