Volvo Group Reorganizes Global Truck Units
Approximately 100 days into his tenure as CEO of Volvo Group, Martin Lundstedt announced changes for the Sweden-based manufacturer that emphasize brand names over market geography.
In a Jan. 27 conference call and press statement, Lundstedt, formerly CEO of Scania Group, said he is creating a “mandate for our sales organizations to control and develop their businesses with an explicit responsibility for profitability and organic growth.”
The truck maker’s heavy-duty North American operations, Volvo Trucks and Mack Trucks, will be more separate starting March 1. Dennis Slagle will remain a member of Volvo Group’s executive board but only as the head of Mack’s worldwide sales.
Slagle has been in charge of Volvo and Mack in North America, with Mack President Stephen Roy and Volvo President Göran Nyberg reporting to him. Slagle and Roy will remain together at Mack, which has headquarters in Greensboro, North Carolina, as does Volvo in North America.
Nyberg will stay in the United States for Volvo, but his new boss will be Claes Nilsson, the global chief of Volvo Trucks, based in Gothenburg, Sweden.
While Volvo Group is emphasizing responsibility for its brand divisions, the company also has three truck group segments covering technology, purchasing and operations that will provide services for the four big brands.
John Mies, a Volvo spokesman based in Greensboro, said of the three truck group support divisions: “We want to combine the best of both worlds: synergies by having global organizations for manufacturing and product development, and clear leadership and responsibility for each brand, to ensure that customer needs are understood throughout the entire organization.”
Volvo Group’s two other major truck brands are UD Trucks, originally Nissan Diesel, which no longer builds new vehicles in North America, and Renault Trucks, primarily a European manufacturer.
The company also makes construction equipment, buses, and marine and specialty engines.
Olof Persson was Volvo Group CEO until April, when he was dismissed by the corporation’s board. Chief Financial Officer Jan Gurander took over on an interim basis, but Lundstedt was picked as the permanent replacement as of October.
Reports at the time of Persson’s dismissal said some of Volvo’s major institutional shareholders wanted new management that would streamline operations and increase profits. After 100 days in charge, Lundstedt unveiled his changes and Gurander remains as CFO and deputy CEO.
“We will also make sure that the brands will get the stronger voice in developing and adapting our customer offers when it comes to the product development, but still using the leverage of having a global product development organization. But I also want to be clear here, it means also a very strong responsibility that each brand will stand on its own commercial and profitability merits going forward, in both the short and the long term,” Lundstedt said during the call.
Bloomberg Intelligence analysts Johnson Imode and Mustafa Okur wrote after the announcement, “This development may have consequences in Europe, where the Volvo and Renault brands overlap at the premium segment.”
They also compared Volvo’s operating margin for trucks with three of its competitors. For the first nine months of 2015, Volvo’s truck margin was 7.4%, excluding charges, or slightly better than Daimler Trucks’ 7.1%. Both companies lagged the 11.2% margin for Paccar Inc., parent of Kenworth Truck Co., Peterbilt Motors Co. and DAF Trucks, and the 9% for Scania, Lundstedt’s former employer and a division of Volkswagen AG, according to the Imode-Okur analysis.
Volvo Group is scheduled to report its annual results Feb. 5.
Last year, Volvo and Mack were the fourth- and sixth-best individual selling brands among the seven U.S. heavy-duty truck makers. Both companies increased sales volume in 2015 over 2014.
Volvo sold 30,930 Class 8 trucks for 12.4% of the U.S. market, a gain of 0.4 market share point over 2014. Mack sold 19,826 big trucks for 8% of the market, a decline of 0.9 share point.
