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Volvo Plans To Grow Vocational Business, Shorten Delivery Time

July 25, 2000

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Volvo Trucks North America's just-introduced VHD family of Class 8 trucks, built specifically for vocational applications and packaged with new support systems for maximized productivity, "will give our dealers a strong motivation to go after "the long-ignored, under-serviced and unappreciated people who earn their living with work trucks."

That's the word from said Chris Patterson, executive vice president - sales and marketing. "It's not just a variant of our highway tractors. It's been designed for the tough duty found in specialized applications."
The new VHD Series will be introduced to Volvo Trucks' dealers at their dealer meeting in mid-August, and "we know they're going to be ecstatic," said the company's manager of sales engineering and product engineering, Ed Saxman. The few dealers who have seen or heard about the new truck are "very pleased and see the potential for building their vocational business.
"They realize that the VHD (which replaces the Autocar and WG trucks), has a broader range of models for specialized applications (like dump, mixer, block, refuse, container roll-off, crane, logging and heavy haul)," he offered.
Along with the new truck series, Marc Gustafson, president and chief executive officer of Volvo Trucks, announced that the company will be aggressively growing its vocational business, and has set as its goal to "triple our market share from the current 10% to 30% in just five years." It has already targeted the 50 largest vocational truck markets in America, which account for about 65% of the sales volume, added Patterson.
Production of the 2002 model year VHD begins in August at Volvo's New River Valley Assembly Plant in Dublin, VA, and will ramp up to full production in January. The new truck will be available at dealers throughout the U.S., Canada and Mexico in late September, and will be sold in a number of export markets, including Columbia and Venezuela.
While no separate franchise agreement is required to handle the new VHD Series, Gustafson said "there are mandatory requirements in terms of schooling and tooling. For example, dealers will have to have critical parts in stock, technicians and parts personnel trained, and dedicated, trained salespeople." The requirements were developed with Volvo Trucks' dealer council and "our dealers are in full support."
Interestingly, the training for parts people "focuses not on technical training but on 'soft' training, Bill Dawson, vice president of customer support, pointed out. "Our front-line parts people already know their parts. We're teaching them how to better understand the customer, establish a quality relationship and be more active in serving customers."
The VHD is the first project for Volvo worldwide where it "started the commercialization of this product as we started the development process of the product itself," noted Gustafson. "The blueprint has been established and is something that's going to be used in all sister Volvo companies (buses, construction equipment, marine and industrial engines and aerospace).
Volvo Trucks has included the VHD is its quick delivery program, wherein a customer can order a custom-spec'ed work-ready truck and have it in 35 days. Order-to-delivery used to take 10 weeks.
However, the goal is it to reduce the time to 21 days, and "that will happen within the next five months as a number of initiatives with the order-to-delivery process are starting to come together," said Gustafson. Once an order is accepted, a confirmed date for when the truck will be built will be had within 48 hours.
According to Gustafson, Volvo Trucks "is integrating the relationship with the customer." Here's how it will work: A customer works with a dealer sales consultant. Together, they go on-line, spec out a truck and place an order. The truck gets dropped into the manufacturing schedule. The customer can go onto the Internet, pick up his case number and track his truck going down the line. He gets the truck in 21 days.
In addition to customers getting their trucks quicker, the quick delivery program allows dealers to reduce their inventory. Plus, there is less re-work than buying a stock truck and "converting" it to the intended application.
Meantime, Volvo Trucks "is in the middle of a transform program with its dealer network," said Patterson. Along with adding some dealer points, the objective is to bring in more higher quality business people and more money to invest.
Currently, Volvo Trucks has about 252 dealer locations and 35 parts-and-service-only affiliates in the U.S., 38 dealers in Canada and about 16 dealers in Mexico.
Neither Patterson nor Gustafson feel the recent purchase of Western Star Trucks by Freightliner will have much impact on Volvo Trucks. "Only a handful of our dealers handle Western Star," observed Patterson. "Western Star has an interesting, very small niche in the marketplace -- about 1.4%, and the highly-engineered, unique vocational trucks it builds aren't really in our target zone."
What's more, offered Gustafson, "it will take Freightliner some time to be able to gain any meaningful synergies out of all of Western Star's vehicle platforms. It has also got distribution issues to rationalize and work through."

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