Volvo Trucks North America (VTNA) is betting rising diesel prices will accelerate adoption of its latest fuel-efficient models, even as freight markets remain soft.

Speaking at a press event to showcase the new VNR regional haul truck, executives said record fuel costs are reshaping the value proposition for new trucks — particularly those delivering double-digit efficiency gains.

“Fuel savings that might have been $5,000 a year are now $8,000 or more,” said VTNA president Peter Voorhoeve in an interview with trucknews.com. “That shortens the payback significantly.”

Volvo has been promoting fuel economy improvements of up to 10% with its latest VNL, a figure that becomes more compelling as diesel prices climb, explained Magnus Koeck, VTNA’s vice president of strategy, marketing and brand management.

He noted U.S. diesel prices hit record highs in the San Francisco Bay area of $7.69 per gallon this week, while the national average spiked to $5.38.

Koeck said freight demand and carrier profitability remain under pressure, with margins hovering around 3%. But orders have surged in recent months, with February marking the strongest order month since 1996 and the best-ever for the month. Koeck said the value proposition of the new VNL can push carrier margins from 3% to 4% thanks to the promised – and now validated – fuel economy improvements.

Recent order strength is not being driven by significantly stronger freight volumes, Koeck said, but rather because carriers have little choice but to refresh their existing aging fleets.

The average Class 8 tractor is now about 6.5 to seven years old, Koeck said, well above the long-term average.

Executives expect 2026 buying activity to start slowly before strengthening later in the year, with a heavier-than-usual back-end recovery as fleets place orders to get ahead of EPA27-related cost increases stemming from the new emissions standard.

Voorhoeve added in an interview with trucknews.com that Volvo is prepared for the upcoming EPA27 NOx standard of 0.035 g/hp-hr, which remains under review by the EPA.

He added that the company is ready even under the most stringent possible scenarios, including extended warranty and durability requirements, with engine updates planned to meet the new limits.

VNR orders led by retail, LTL fleets

As for the VNR, Volvo has already booked about 2,000 orders, with demand largely aligned with traditional use cases rather than new segments.

Early demand is coming largely from established customer segments, particularly retail distribution and less-than-truckload fleets.

Voorhoeve pointed to grocery and retail operators — including major chains — as core early buyers, along with LTL carriers and regional haul fleets.

“The strength is in the day cab,” he said, adding the platform is also expected to expand Volvo’s reach into straight truck applications.

Mexico plant to boost flexibility, not shift production

To support anticipated growth, Volvo is investing about $700 million in a new plant in Monterrey, Mexico, while continuing to expand its flagship New River Valley facility in Virginia.

Voorhoeve stressed the move is about flexibility rather than shifting production out of the United States.

“At least 80% will continue to be built here,” he said of Volvo’s North American truck production in New River Valley, noting the additional capacity will help the company respond more quickly to swings in demand.

The added capacity is less about total volume than the ability to ramp production quickly when orders spike — a recurring challenge in past upcycles, he explained. It also eases any constraints on the total North American market share the company can achieve with just the one plant.

Tariffs now baked into pricing

Volvo has also moved away from tariff surcharges, instead incorporating costs directly into truck pricing as trade policies stabilize.

“We don’t need tariff surcharges anymore because we know what the situation is,” Voorhoeve said, referring to U.S. Section 232 tariffs on steel and aluminum.

However, he noted tariffs remain a factor for vehicles produced in Mexico, where cross-border trade dynamics add complexity.