Volvo looks to shift out of heavy truck industry rut

Swedish vehicle maker Volvo Group Thailand is confident it can overcome the contractions that plagued the industry last year as the local truck market starts growing again.

The heavy-duty truck and mediumduty truck sector will grow by 5% to 17,100 and 7,670 units, respectively, thanks to the country’s strong economy, said president Kamlarp Sirikittiwatn.

Better business sentiment from entrepreneurs and higher demand from the country’s border trade with Malaysia, Cambodia, Laos and Myanmar will drive the truck market, said Mr Kamlarp.

“Thailand’s export sector will expand in the next two years, in line with a rising global economy, especially the hard disk and semiconductor industries,” he said. “The government’s much-touted Eastern Economic Corridor scheme is expected to be implemented in July. Many foreign investors watching this project as related government infrastructure projects are scheduled for 2018.”

Volvo’s customers are mainly in the petrochemical and consumer goods industries. The UD brand deals with construction vehicles and exchangeable loads.

The exchangeable load and long-haul logistics segments will grow this year as e-commerce becomes dominant in the country, said Mr Kamlarp.

The overall heavy-duty truck market contracted 5% in 2017 to 16,293 heavyduty trucks, while the medium-duty sector dropped 9% to 7,307 trucks.

“Volvo Group forecast a double-digit decline, but the market performed better than expected,” said Mr Kamlarp.

“The country’s GDP rose 3.9%, but this growth was not reflected in every sector. Only tourism and exports did really well. The business and industrial sectors had to face high operating costs, which pressured them to buy new trucks.”

Last year, Volvo Group Thailand sold 356 trucks, 9% less than 2016. UD made 895 units, up 12% from last year.

UD Croner was introduced last March as a medium-duty truck, the company’s first foray in the local medium-duty sector, said Mr Kamlarp.

Last year, UD ranked third in the medium-duty truck segment after Japanese peers Isuzu and Hino.

The company, formerly known as Nissan Diesel, was founded in Japan in 1935 before becoming part of Volvo in 2007.

Volvo’s market share in 2017 was 2.2%, down 0.2 percentage points from the previous year.

Volvo’s manufacturing facility, run by Thai-Swedish Assembly Co in Samut Prakan, has an annual production capacity of 4,500 Volvo trucks and 20,000 UD trucks.

Last year, the plant built 8,003 trucks, up by 95% from 4,102 a year before.

Indonesia was the top destination for shipments, with 1,280 completely builtup and 1,540 completely knocked-down UD-branded vehicles. South Africa, Saudi Arabia and the United Arab Emirates were the next largest customers.