North America Won't Feel Volvo Price Hikes
July 24, 2000
Volvo Trucks North America does not intend to follow its parent company's plan to raise prices in order to address the downturn in truck sales.
Last week, the Swedish heavy-truck maker said it would hike prices in Western Europe. The company did not say exactly when the price increases would be seen, or by how much prices would rise.
"It's an interesting strategy, but not one we'll be taking in North America," said Volvo Trucks North America president Marc Gustafson, in Asheville, N.C., to introduce a new model for the construction market. He added that distribution models and pricing structures are substantially different in Europe.
The company estimates the market for Class 8 vehicles at 220,000 units in North America, with sales declining steadily through the end of the year, and 250,000 units in Western Europe.
Last week, Volvo reported a fall in first-half operating profit of only 31 million Swedish crowns ($3.39 million) after 859 million crowns a year earlier.
"The result for the truck division is at an unacceptable level," the division's new president Tryggve Sthen said. He announced a one-billion crowns cost-cutting program that includes a review of all overhead costs, product development costs, and a sharper focus on aftermarket business.