Feb 14, 2017 Volvo, VolvoTrucks, SouthAfrica, HeavyDuty, Trucking, Aftermarket, Economy
Volvo Trucks invited the media to a presentation in mid February to kick off the 2017 sales year amid much positive sentiment. The South African management team were on hand to discuss various aspects of the truck maker's plans for the coming year.
President of Volvo Trucks Southern Africa, Torbjörn Christensson, led the presentation which started with an overview of the group's performance in 2016.
The group recorded a SEK 302 billion (around R445 billion) turnover last year, down 3% on the year prior. Despite this, profitability improved with an adjusted operating margin of 7.0% for the full year. Sales in the US were considerably lower than in previous years, down 30% on 2015, while European sales were up 4%. The segment showing the greatest growth overall was service sales, indicating that in general the truck life has extended and servicing has increased, meaning an increase in the aftermarket market share.
Following last year's separation of brands, the group is not planning any more major structural changes. Christensson commented that the group was happy with the synergy created behind the scenes between the brands – such as synchronised administrative functions – which had and would continue to create further efficiencies in the marketplace.
The focus for 2017 will largely be on the further movement into Africa. At the same time, South Africa will see a major investment in its factories to allow for locally built trucks to include the safety systems previously only available on European built models.
According to Christensson this investment is expected to reach up to R6.5 million in local factories and will allow the inclusion of safety features - such as electronic stability control, adaptive cruise control with forward collision warning and emergency braking, lane keeping and lane change support, as well as driver alert support – from March. This is in response to customer demand and in line with the safety focus from Sweden. AutoForum expert fleet writer Dave Scott expressed his hope that this focus on safety would extend beyond the truck tractor and into testing and maintenance of the truck trailers, a safety critical feature that has a massive impact on the safety of SA roads.
Another highlight for this year is the launch of new financial solutions and packages for customers – more clarity on this is expected in the second quarter. As highlighted at the event by Scott, this will be a welcome response to Volvo's competitor's zero cost of maintenance campaign currently in the market.
Volvo Trucks is bullish about its growth in the upcoming months. Christensson points out that the dealer network is consistently growing with 19 dealerships at present. The newly opened Alrode transportation hub will this year see the opening of its additional area and the facility in Port Elizabeth will see a major investment in its operation. Together with a “partner” it will become a “state-of-the-art” building from March, while the Pinetown hub is touted at receiving the next major investment, which should come into being in 2018.
Moving into Africa, Volvo has confirmed that its Angolan operations will benefit from a US$30m boost; Kenya is about to open its operations together with an importer partner and Zambia is to open a completely new facility with an importer first in in Lusaka in April and then expanding into further regions in the country.
Volvo Trucks says that it will retain its training initiatives, having spent R25Million on staff training in 2016. "Train them, keep them, develop them" adds the company president, explaining that the company sees its training investment as a strategic response to attaining the best staff over the long term.
The company is forecasting an optimistic 5% increase in sales for the year, thanks in large part to the rosy picture painted for the SA agricultural and mining sectors, which drive sales in the heavies market.
In terms of the APDP and its impact on the truck market the company is taking a wait and see approach, but believes that should the local content requirements be enforced it will undoubtably see a cost implication for the consumer.
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