“Truck manufacturers are not able to generate any returns on their investment at the pricing levels that have prevailed in the recent past”, stated Karl-Erling Trogen, senior vice-president of AB Volvo, Volvo Trucks North America’s parent company. “These problems extend backwards into the industry’s supply chain, and outwards to dealer networks, who are suffering financially in their role as the primary service providers for customers. Without pricing relief, we and our dealers will not be able to meet the investment demands placed on us to improve our products and services, as well as meet ever-more restrictive and demanding governmental regulations in the areas of environmental sensitivity and highway safety.”
This event is against a backdrop of declining new truck sales activity due to a dramatic oversupply of used trucks. The used truck population is calculated by some industry experts to reach 300,000 units by 2003 in the NAFTA markets.
“Our trucks are perfectly capable of performing front-line service for six years or more without undue repair costs or downtime”, said Chris Patterson, executive vice president, sales and marketing, Volvo Trucks North America, Inc. “Because of the advances in research, technology and manufacturing, the industry has elected to accept an increased trade cycle for the first owner.”
In response to this crisis, Volvo is curtailing shorter-term leases and repurchase agreements, which are the primary drivers of the used truck surplus.