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Volvo: Internet Will Change Industry

November 2, 1999

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Today's distribution system for trucks and components is ripe for overhaul and the Internet is the force that can do it, says Marc Gustafson chief executive of Volvo Trucks North America.

"There is a tremendous amount of redundancy in inventories and suppliers," he told Newport editors at the ATA convention in Orlando. "The Internet can collapse the current system."
Gustafson believes companies within the industry should be more aggressive in making use of the Internet to improve the efficiency of product distribution if they don't want to be displaced by outside players. "The Internet lowers the barriers for entry. If we don't make the change, someone on the outside will."
Vehicle manufacturers will play a key role in the change because they are moving down the "value chain," he said. "Three years ago, I made the radical statement that Volvo was not a manufacturer, it was a marketing company. Suppliers should work on developing new product and new technologies. The OEMs should handle distribution. They should be the interface with the customer."
That explains Volvo's increased emphasis on new services. "We're developing new services at three to four times the rate of new product," says Gustafson. "The value of a brand is in service, not product. When you develop new product, your advantage is fleeting. It doesn't take long for someone else to bolt on the same thing. Customers aren't concerned with the means; they're concerned with the ends."
Gustafson says the deemphasis on product is backed by Volvo management in Sweden. As head of the company's global sales and marketing efforts, his philosophy will influence the way Volvos are sold worldwide.
Coming soon: A new web site which will do more to help dealers find and keep customers. Dealers will be given "strong incentives" to develop their own web sites so that they can be integrated into the Volvo corporate site. The ultimate goal is to have a seamless system which will allow you to search dealer new and used truck inventories online.
Another service item in the works: Paying for truck uptime instead of trucks. Users will pay a guaranteed cost per mile for a fixed period of time. Truck location and mileage will be tracked with a new onboard communications system based on Volvo's Dynafleet system, currently available on the company's European trucks.
The advantage of paying per mile is that a user doesn't have to pay for overhead if business is slow. "You're only paying when the truck is moving," Gustafson said.

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