GOTHENBURG, Sweden – As president and CEO of Volvo Trucks North America, Inc. , Peter Karlsten must wrestle with the new manufacturing strategies necessitated by customer demands for increasingly sophisticated products brought to market at increasingly faster speeds and the corporate need to better leverage economies of scale.

Truck West caught up with Karlsten in Gothenburg, Sweden, and this is part two of that interview.

TW: How does the dealer have to evolve to keep up with the changes in the market place and how are you preparing your dealer network for this change?

PK: Volvo’s North American dealer network has seen tremendous changes since 2001.

The total number of Volvo outlets has increased from 275 in June 2001 to 354 today, and we expect that number to continue to grow.

This has provided our dealers with a very strong business proposition, as they have seen significant improvements in dealer parts absorption and return on sales.

Our dealers as a whole are now stronger and better able to provide premium levels of service.

Volvo has made a deep commitment to providing customers with a premium level of service and support.

These resources are part of Volvo’s “World Class Customer Satisfaction” initiative. The objective of WCCS is to ensure Volvo customers enjoy industry-leading service and support, along with increased vehicle uptime, and reduced maintenance and service costs.

We are accomplishing this by providing our dealers with advanced technical support and training, as well implementing our Symbols of Excellence program of dealership best practices.

TW: What’s your read on the engines you currently have in the field. I’ve heard a lot of different figures from fleets and manufacturers on fuel efficiency loss.

I realize that it’s dependent on application but overall from your own data collection what are you finding in terms of fuel performance?

PK: All of our data indicates that, thanks to the fact that we have the only new vehicle totally redesigned around the EPA’02 engines, the Volvo VN has experienced fuel economy degradation of zero to 2 percent. And the performance and reliability of the Volvo VED12 engine has been excellent.

TW: Is there anything that can be done to improve that as EGR technology evolves?

PK: We already have excellent performance, reliability and fuel economy from the Volvo VED12 and the Cummins ISX.

The new family of Volvo engines Volvo Trucks North America will have in place for 2007 will build upon that starting point. In addition, the Volvo VN was designed with the 2007 standards in mind, so again we see the benefits of being an integrated manufacturer.

TW: How about repair costs? You had a limited window to test the EGR engines. Based on the company’s own expectations, how are the engines holding up in the field so far?

PK: Excellent. We have had no major problems and the Volvo VED12 engine has gained a tremendous reputation for reliability and performance.

TW: Let’s look ahead to 2007. How is Volvo coming along with preparations for the 2007 emissions standards?

PK: As we shared with the media in Sweden in October, everything is well in hand and we are very confident. Our technology path is well known and the technologies involved – EGR and diesel particulate filters – have plenty of real-world experience operating in North American conditions. We are prepared to meet the new standards in 2007.

TW: When will you have engines running in customer fleets?

PK: Between Mack and Volvo – both of which will be using the same emission-control technologies – we plan to have about 30 engines in field testing with selected customers, beginning in the spring of 2005.

In the meantime, we are working with ATA to ensure that as the industry moves toward EPA07, the needs and concerns of customers are addressed.

TW: You will continue using cooled exhaust-gas recirculation on the diesels built as of Jan. 1, 2007. Why will EGR still be right for the North American market in 2007?

PK: EGR has proven very reliable and meets emissions regulations while meeting customer performance expectations. The development of the EPA’07 EGR solution will draw upon Volvo’s significant real-world experience with EGR in our EPA’02 compliant VED12 engine, and Volvo’s technical expertise and volume base as part of the Volvo Group, the world’s largest producer of heavy-duty diesel engines.