Volvo ties truck sales to state projects

Volvo Group (Thailand), the Swedish maker of buses, excavators and construction equipment, is pinning hopes on the government's megaproject development to boost sales in the heavy-duty truck market.

President Jacques Michel said a lot of investment projects had been postponed during the political turmoil from the end of 2013 to the first half of 2014, which battered Thailand's economy and dented demand for heavy-duty trucks.

He added that the company remains confident about Thailand's fundamentals, which could boost truck demand in the future, saying the Thai market over the past two decades had grown from sales of only 10,000 units a year to more than 30,000.

Mr Michel projects overall sales of heavy-duty trucks this year would remain tepid at 18,000-20,000 units, saying sales over the first quarter dropped by 20% from the same period last year.

Against falling sales of the overall truck market, Volvo Group (Thailand) was fortunate to see sales of both Volvo and UD trucks grow in the first quarter.

Volvo brand sales were up 20%, while UD trucks rose 25.3% year-on-year. "The long-delayed megaprojects worth about 2 trillion baht could boost sales of the truck market to the level of previous years, but only if the government gives them the green light soon," he said. "About 21,000 trucks were sold last year, down by 47%, which marked the first year of falling sales after sales hit a peak 31,000 units in 2013."

The group launched Quester heavy-duty trucks last August at its assembly plant on Bang Na-Trat Road in Bangkok.

Quester is the first UD truck developed especially for growing markets, while Volvo's heavy-duty trucks remain focused on the premium segment.

Volvo Group introduced its trucks to the local market under the Volvo brand in 2008, followed a few years later by UD Trucks, formerly known as Nissan Diesel. UD became part of Volvo in 2007. In 2014, Volvo Group (Thailand) sold 565 Volvo heavy-duty trucks and 242 UD trucks, down sharply by 34.2% and 32.8%, respectively.

Mr Michel attributed higher sales mainly to new models launched last year.

Mr Michel said Volvo Group last year completed its 5-billion-baht investment plan in Thailand, including 1 billion baht on setting up its regional headquarters here.

Volvo spent 2 billion baht in 2009 to expand annual production capacity to 4,500 Volvo trucks and 20,000 UD trucks. It spent the remainder on expanding the number of wholly owned showrooms and service centres from five in 2011 to 15 in 2014.

Thailand is now the global production base for Volvo and UD trucks for export, particularly those destined for Asean, Africa and the Middle East.

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