Volvo Merges N. American Units; Mack, VTNA Brands to Remain

This story appears in the Nov. 2 print edition of Transport Topics.

AB Volvo said that it is reorganizing its North American truck business by combining its two brands —Volvo Trucks North America and Mack Trucks — into a single new entity called North American Trucks.

Dennis Slagle will run the company as CEO after a year and a half running Mack. He will report to AB Volvo CEO Leif Johansson in Sweden. Per Carlsson, who had been president of VTNA since January 2008, will become chief operating officer of the new unit and report to Slagle.

“We’ll continue to have two distinct brands in North America,” said John Mies, vice president of corporate communications at Mack Trucks and VTNA. That means “separate sales organizations, separate brand strategies and separate vehicle ranges. To the outside world, there should be very little change.”

Mies said Volvo will keep the Mack and VTNA truck brands distinct for the foreseeable future.

The creation of North American Trucks, effective Nov. 1, is the latest step in an effort by Volvo to streamline its operations here, an initiative announced in 2008.

As part of that effort, Volvo has moved VTNA and Mack administrative personnel into a single headquarters in Greensboro, N.C., and limited its truck-making operations to one factory per brand.

Mack Trucks previously moved out of its Allentown, Pa., headquarters to join VTNA in Greensboro. Mack reached a deal to sell the Allentown headquarters earlier this year.

Mack had done business in Allentown since 1905 and had been headquartered there since 1965.

Volvo’s restructuring also removed all production of on-highway, including Class 8, Mack trucks from the New River Valley manufacturing plant in Dublin, Va., and relocated it to Macungie, Pa. The Macungie plant previously had produced only Mack’s vocational trucks.

All Volvo-branded trucks are still made at the New River Valley plant. Engines for both Volvo and Mack trucks are manufactured by Volvo Powertrain in its Hagers-town, Md., plant.

The new North American Trucks group also will include the North American operations of Volvo Powertrain, which also makes gearboxes.

Mies said that Volvo’s North American truck dealership network would not change.

The head of a Volvo dealership in Wheeling, W.Va., confirmed this point. “Nothing’s going to change for the dealers or our network,” said Ronald Remp, general manager of Wheeling Truck Center.
“Hopefully, we will be able to see some synergies between the truck group and Volvo Powertrain,” Remp added. “Hopefully, both truck groups and powertrain will be able to respond a little more rapidly to the market now.”

AB Volvo, Gothenburg, Sweden, is the world’s second-largest heavy-duty truck maker. The company acquired Mack in 2001 when it bought the truck-making business of Renault SA, the French company that acquired Mack in 1990.

Volvo entered the U.S. truck business in 1981 when it purchased the assets of the insolvent White Motor Co.

So far this year, the Volvo brands are third in U.S. market share, lagging both Navistar Inc., maker of International trucks, and market leader Daimler Trucks North America, maker of Freightliner and Western Star trucks.

Volvo and Mack sold a combined 9,958 trucks in the first three quarters of 2009 here, according to data from WardsAuto.com. In the same period, Navistar sold 18,830 trucks, and the Daimler companies, including the now-defunct Sterling brand, sold a combined 20,521 trucks.

Like other manufacturers, Volvo’s truck business has been battered by the recession.

Earlier this month, Volvo reported that its truck division had an operating loss of about $341.9 million in the third quarter of 2009, down precipitously from a year-ago operating profit of $398.4 million.

The truck division’s revenue fell 34% to $4.4 billion in the third quarter, contributing to the fourth consecutive quarterly loss for the parent company, Volvo said.

Through September, total North American truck sales were 81,900 units, a 42% drop from year-ago levels, Volvo estimated in its latest quarterly earnings report.