To kick off this edition of Hooked Up, I’ll take you back to Mexico, to the Expotransporte trade show in Guadalajara. Last time I wrote, I had just visited a Volvo fleet outside Mexico City. I reported on their sophistication, and the...
To kick off this edition of Hooked Up, I’ll take you back to Mexico, to the Expotransporte trade show in Guadalajara. Last time I wrote, I had just visited a Volvo fleet outside Mexico City. I reported on their sophistication, and the fact they were taking delivery of the first 100 I-Shift transmissions to be deployed in the country. Afterwards, we visited the trade show, which is unlike any trade show you’ve seen in the US or Canada. For starters, there’s a really festive atmosphere and a great energy throughout the show. Maybe it helps that you can grab a free tequila at most of the booths. Can you imagine if they tried that in Louisville?
The shows also run longer into the evenings. The floor is as busy at 8 p.m. as it is at noon. And the other thing that’s interesting about the Expotransporte show, is that truckers there show up with their chequebooks in hand, ready to place orders. Exhibitors refer to it as a “selling show,” which apparently is the way these shows work in Central America, too. Here in Canada and the US, the trade shows are great networking opportunities, but how many big deals are closed right there on the show floor?
Volvo Group had an impressive presence at the show, and for good reason. It’s trying to capture 15% of the Mexican truck market by 2015. It’s an ambitious target, considering its current share sits at less than 10%. But it now has more product to peddle there. At the show, Mack introduced the Vision model, its first-ever highway truck to be offered in Mexico. And Volvo made official the launch of its I-Shift transmission in Mexico. This marks a new approach to the Mexican truck market for Volvo. It previously offered de-contented trucks in an effort to compete on price. However, Volvo recently has begun offering more feature-laden trucks with all the latest technologies, with a hope fleets there will focus more on value than price.
This is great news for the more advanced fleets, which complained in the past of being offered low-tech solutions rather than the latest and greatest offerings that we in Canada and the US enjoyed. Still, the Mexican truck market is bit of an enigma. You have some extremely well run, sophisticated fleets operating there (more on them in a bit). They buy about 25,000 new trucks each year, roughly the same number as is sold in Canada. But at the same time, about 400,000 of the 750,000 trucks in the country are 20 years of age or older.
The Mexican government is trying to encourage the replacement of these older trucks, and now offers “scrapping certificates” that reimburse owners about 16% of the cost of a new truck if they take an older one off the road and dispose of it through a registered scrap agency. These scrapping certificates account for about 80% of Volvo’s sales in the country, according to Matt Walsh, managing director of the Mexico region for Volvo.
So, how does Volvo plan to capture an additional 5% of this emerging market in just two? Matt said Volvo will aggressively expand its dealer network, from 36 locations today to about 65 by the end of 2015. The company is also taking aggressive steps to break into the private fleets that make up the influential ANTP association. Till now, Matt acknowledged Volvo has been unable to crack these large buyers. But the company has demo trucks running with eight of the largest ANTP fleets and he says they’re performing favourably, giving Matt reason to believe that “next year, we’ll see very good penetration from the Volvo brand into these large private fleets.”
I look forward to following up with Volvo in two years’ time to see how this strategy pans out for them. They’re not the only OEM looking to make gains in Mexico, so they have their work cut out for them, but they feel pretty good about where they’re headed. By the way, one final note about Volvo’s ambitions. That 15% market share goal extends to the US and Canada as well. Goran Nyberg, Volvo’s North American president of sales and marketing, has focused on bolstering Volvo’s dealer network in the US and Canada and the company is now planning to get more trucks out there. It’s off to a good start. Goran told me October was a great month for Volvo Group. It saw a sales surge, especially in Canada where it took about 40% of the new truck orders placed here.
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