Interview with Claes Nilsson "We will continue to be creative"

Claes Nilsson, Präsident Volvo Trucks im Gespräch Foto: Thomas Küppers

Volvo Trucks fascinate the audience with spectacular videos. Even the president of Volvo Trucks, Claes Nilsson, was in one of them. We asked him about the purpose of the videos.

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Mr. Nilsson, do you have a fear of heights?

I do. I’m not very comfortable in a high position like the one in the video “The Hook”. We tested it before and I was really nervous when I saw the height, but it worked very well. I had so much safety equipment that you don’t see in the movie. I really was up there – 25 meters above the water level – and I had to stay there for about two hours. Even worse than the height was the cold wind up there.

Volvo launched another movie starring Jean-Claude Van Damme? Who had the “epic split” idea?

Basically, the creative idea came from our new agency that we hired for the launch of our new range. But the concept behind all our films was from our marketing and communications department. They said that we have to do something with the dynamic steering just like we did with the hook. Based on that input the agency came up with some ideas and I think they have done a good job. We used social media for distribution of the films because we decided that we wanted a completely new approach to marketing the products and we wanted to do it in a spectacular way.

But is this also an efficient way of marketing? A lot of the users watching the Van Damme video were probably watching it because of Van Damme and not Volvo Trucks.

The purpose of these videos is to create interest and awareness. You’re right – the majority of the 70 million views are not from people who want to buy a truck. But we had an extremely good rate of people watching the video and then going to our homepage. The purpose of those videos was to create a bigger awareness of our products and that worked very well.

You’ve been so successful with your marketing strategy on the internet, what is the next step?

This strategy was connected to the launch of our new products. While doing this, we have learned a lot about social media, and how good and cost-efficient that is. At the time of such successes you cannot just continue with the same approaches. So our challenge now is to find an even smarter and slightly different way for our marketing, but continue using the social media and the same technologies. It’s difficult to top Van Damme, so we need something different. We will continue to be creative, that much I can promise.

After launching an entirely new product range, there is one last step to do: implementing the I-Torque in the FH.

The I-Torque is not yet in the market, but we’re working on it. For the market-start we have to secure that it delivers the expected performance. I cannot tell you the exact date yet.

…but wasn’t it supposed to be introduced to the market last year?

Yes, but it has been delayed compared to the communication of last year.

I-Torque is going to be an additional feature that means an additional investment for the fleets. What is your experience with your customers – are they willing to pay for such features?

For the features we already have in the market like I-See, dynamic steering or I-ParkCool, I must say ‘yes’. Many of our customers are prepared to pay for these features. But we also have customers who are not prepared to pay for the load of features we have as standard in our trucks. It’s different from customer to customer.

In which markets will most of your customers be willing to pay for these features?

Germany is one of those markets where truck owners appreciate such features. There the truck and fleet owners have a holistic view of the truck. They don’t just look upon the cost of the truck, they see the value of having a truck, which, for example, the driver appreciates. This becomes more and more important in countries like Germany, and also in Scandinavia.

How are the numbers of Volvo Trucks overall since you launched your new range?

In the EU plus Switzerland and Norway, we had a 16.3 percent market share last year, which is the highest we had in almost 20 years. But even more dramatic is that in the beginning of the  last year we had almost 14 percent, a much lower market share when we had not launched the FM, FE and FL yet. That was after six months. So the last six months were really good for us. It was pacing towards 18 percent in the last six months.

…and especially in Germany?

Germany is a very competitive and difficult market, so we ended up with an official registration statistic of about nine percent due to the very strong domestic competitors there. We will never be the biggest competitor in Germany, but we really hope that we can attract the customers in Germany with the values we offer. But anyway, we’re quite pleased with the development in Germany too.

The Volvo Group is heading for a 15 percent market share in Germany with Volvo Trucks and Renault Trucks altogether. How big of a part is Volvo Trucks in that plan?

I don’t want to give an exact figure of that. We already have nine percent in the German market.

…but if you reach 13 percent, the Volvo Group is close to the 15 percent mark.

Mathematically, you’re right. Our main target is to select our customers and make sure that they’re happy with our products and services. We’re more concerned about our customers’ satisfaction than to be very aggressive in growth. We think to have 15 percent in total for both brands is acceptable and still not aggressive. And with the new product ranges of Renault Trucks and Volvo Trucks we think that we deserve this percentage.

How satisfied are your customers? Is there anything you to improve on?

We have further improved over several years in customer satisfaction. Even external public surveys say the same thing. Those who really experience the Volvo products and the Volvo network are quite happy. So we have more of an awareness problem in Germany than a satisfaction problem.

Which European market share do you want to reach in 2014?

We don’t give targets like that. Our official view on this year, if we start with the total market, is that it will be slightly lower than last year. Because last year we had an enormous peak in December with Euro 5 registrations. In the EU we think we will be in a heavy duty-market over 16 tons at about 230,000 units compared to 240,000 in last year. Two hundred thirty thousand is more than what we had in 2012. You can say that we basically look on a stable market.

What about the Asian market and your joint venture with Dongfeng?

The idea is to create a joint venture between Dongfeng and the Volvo Group, a separate entity where you take the major part of commercial vehicle activity of today from Dongfeng and put that in a joint company. Dongfeng is going to have the majority stake in that constellation and the Volvo Group will have a little bit less than 50 percent. The Volvo Group also has a joint venture in India with Eicher Motors.

How important are those markets for Volvo Trucks?

I think for any truck manufacturer the local markets in India and China are and will be very important, no doubt. And the only way to get into an important part of those markets is to do that via a joint venture with a local partner. We tried many years by penetrating these markets with Volvo products, but it’s extremely difficult. You only become a niche player over there if you compete with the standard European products.

With a strong partner such as Dongfeng on your side, do you think your efforts will pay off in China?

The joint venture is not concluded yet. In best case it will be concluded mid 2014. Then of course our ambition with that is to get access to the Chinese market. And we also believe that there could be a benefit with the better access to components and parts on the Chinese market.

Are you working on an international platform strategy that includes your brands in Asia and the US?

Gradually, yes. Some of the models the Volvo Group has in different markets are on a common platform. I think where we came the furthest on a platform is the driveline with engines, gearboxes and rear axles. On the vehicle- and chassis-side, there is more to be done, but we do this step by step. We have to do it carefully, because it’s always a balance to secure you keep your brands and products distinct and on the other hand you use common technology as far as possible. This is a long journey, but it’s under implementation. You can see that in the new  Volvo and Renault trucks. There is already a lot of common technology. A lot of those things you don’t see as a customer and that is the purpose. In terms of combustion technology and in terms of a lot of other driveline technologies we use the same basic technology. To have for example two completely different Euro 6-technologies would not be economically reasonable.

What are your plans on alternative drivelines?

It’s obvious that we will have a lot of gas available in Europe. So that is one of the areas where we need to continue with the developments. As you probably know, we already have a Euro 5 methanediesel engine. We work on new technologies for that. This is one avenue we believe has potential to take a big portion of the diesel engines market in the future.

… so, there will be a Euro 6-version of the "dual fuel" engine?

We’re working on a Euro 6 solution for our methanediesel engine. We need some more time not only to verify towards the new emission levels but also we are aiming at a new technology platform which will further improve the benefits of the product.

How big will the share of dual-fuel truck in your company be in the future?

I cannot give a figure for our gas engines because it’s a combination of what we do as the manufacturer and what the distributors of gas do. The question is: How good will the infrastructure of gas-distributors be? That’ll have a big impact on the percentage of customers who decide to use a methanediesel truck. We have a very positive view on the opportunites for LNG on the market.

How good is the availability of gas in Scandinavia?

It’s not good enough. It could be better. Mostly there’s CNG available. We believe in terms of distribution and storage and things like that in LNG. LNG has a lot of benefits compared to CNG especially for trucks. But it’s often not available.

Do you work on hybridization as well?

We already have a lot of trucks with parallel-hybrid engines in our customer´s fleets. But the development in hybridization is not going as quick as we thought it would go, which means the battery packs are still extremely expensive and it’s very difficult for the owners to make a business case out of the hybrid trucks. That’s why we are not so optimistic about the hybrid technology so far.

The Volvo Group is cutting 4,000 jobs. How big will the impact be on Volvo Trucks?

The 4,400 white-collar job cuts is a combination of making the staff unit and headquarters functions of the Volvo Group more efficient and rationalizing some areas of the manufacturing operation. This affects all the different brands. It’s more an efficiency improvement than anything else. I mean with 4,400 jobs – and the Group has today about 110,000 employees – we’re talking about  four percent.

Have you ever spent the night in an FH?

Yes I did, several times. I should drive even more. But I spend the night in the truck every once in a while. I would like to drive even more.

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