Q and A: Peter Voorhoeve, VGA

While the heavy-duty truck segment struggles on in a transitioning, post-resources-boom economy, and new registrations in the medium-duty category hold steady, one truck company bucking the trend in both segments is Volvo Group Australia (VGA).

Combine the year-to-date new registration figures of its Volvo, Mack and UD brands to the end of July and VGA has overtaken PACCAR Australia (Kenworth and DAF) to hold a leading market share of 25.6 per cent the heavy-duty category, versus the latter's slice of 23.3%.

Volvo is on a charge with its recently revised range, with total year-to-date registrations up 9.8% to the end of July. While year-to-date registrations for Mack are down in the wider heavy-duty segment it's largely holding its own in the conventional niche in which it operates, while UD Trucks, in its 80th anniversary year, is powering ahead – particularly in medium-duty.

The man charged with guiding VGA through these tricky economic times is ex-pat Dutchman and Group President, Peter Voorhoeve, who has headed up VGA since start of 2014.

Twenty months after he assumed the role, trucksales.com.au caught up with Mr Voorhoeve at VGA's head office in Wacol, Brisbane, to learn more about the group's strategy for success…

trucksales.com.au: Achieving growth in a declining market must be very satisfying, but is it sustainable against the backdrop of a transitioning economy?

Peter Voorhoeve: By the end of 2013 we had a [heavy-duty] market share of 22.2%, I believe. That's roughly when I came on board but I did not come to Australia with a mandate to increase market share. I came to Australia with the mandate to do whatever I could [to help the business] because this is a very important market for us, but my whole focus has been very much about customer-centricity and service, service, service.

Everyone wants to be number one in the market but I would like to be recognised as number one in service and customer satisfaction. That's what I want and that's what we've been working towards for the time I've been here.

I have an aftermarket background; I live very much by the principle that the first truck is sold in the showroom and then the second, third, fourth and fifth trucks are sold in the workplace, because it all depends upon the service experience.

That has led us to increased sales. That whole service and customer satisfaction approach has led to the customers we already have staying with us, and when they grow, we grow with them. We have some new sales too, so we went from 22.2% by the end of 2013 to 24.6% at the end of 2014, and now 25.6% [to the end of July, 2015].

It will not continue that way because otherwise in a couple of years we would be at over 30% and I don't think that will happen, but we are a dominant player, which is not so strange with the brands that we have and the global position that we take. I'm very happy with it!

Where will it end? I have no idea. Will it grow further? Well, could be, and by the time the market starts growing again that market share will hopefully become under a little bit of pressure. But the proof of the pudding is in the eating, and in truck terms it's about what you do in a market that's going down – because when the market goes up everybody can sell trucks.

TS: What feedback are you receiving, positive and negative, on the new Volvo range?

PV: I think our customers are very positive around fuel efficiency, even though we didn't put the vehicle in the market with that promise. We're also getting good feedback on the driveability, the manoeuvrability, and of course on the driver environment.

The driveline is the same but the cabin is completely new – we designed the cab around the driver so that he can feel at home in his truck.

Negatives? Not many but I'll quote one: that the bunk is a bit small – but we hear that more from journalists than customers.

Some ask us where we are at with the [now unavailable] XXL cab. But don't forget our new cab is now bigger than the old cab, and a lot of customers we see now say, 'We get it' – the cab is designed in such a way you don't really need an XXL cab anymore.

TS: Mack's new registrations were down 14 per cent at the end of July. What's influencing that?

PV: If you look at the [heavy-duty] market it's basically 8.8% down versus last year. If you break it down into the cab-over segment and the conventional segment, then what you see is that the cab-over segment is down 4% but the conventional segment is down 14%.

If you take Mack sales in the conventional segment they were at 23.5% [market share] last year and now they are at 24%, so actually Mack has been following the market with a very small plus.

Let's say that Mack is selling actually what it's supposed to sell but its segment has shrunk harder than the cab-over segment.

TS: Registrations of new medium-duty UD trucks are up 8.3% year to date to the end of July – what's behind that upward swing?

PV: It's our total package offering [UD has been offering a range of added-value 80th anniversary packages this year] but I also think it's because we have reviewed how we do UD.

Everyone knows that compared to Hino and Isuzu, UD is a bit of a smaller assortment, but what we have is very good and we've been concentrating more on what we have.

The second thing is I think [UD Trucks Vice President] Jon McLean and his team have very well recognised the medium-duty segment is different from the heavy-duty segment, and that has translated into insurance offerings, finance offerings and more packages, because the medium-duty truck customer buys his truck in a different way.

Thirdly, until two years ago we were strong with small customers but now we have had some success with the fleet customers too.

TS: Can you explain the reasoning behind the recent introduction of Volvo Classic Parts, Mack Vintage Parts and UD Heritage Parts?

PV: Let's refer to them all as Classic parts. The [price] difference between a new 'Classic' part for an older truck is around 30 per cent lower than [the equivalent] for a new truck, because the whole idea is that people use trucks of different ages in their fleet and older trucks are used differently and have different uptime requirements, which also means people do their maintenance in a different way.

Our reasoning was this: the parts are still genuine Volvo or Mack or UD items for older trucks, but I'm not going to fly them in – I will not have 96 per cent availability, I will not have a vehicle on-road service and all that sort of stuff. The parts now come by ship, so we've redesigned the supply chain and that allows me to give a different value proposition.

The only thing the customer will see is that these parts have a lower price, and that maybe sometimes the availability is a bit different, but what we were seeing is that some of these parts weren't being sold at all – they were in the warehouse under a thick layer of dust.

So now we see all of sudden these parts moving, and the choice we now offer the customer is that you can still come to us for those parts rather than going to spares websites, and at a value proposition that fits your business.

TS: What are the biggest challenges you face in pulling the three brands together under the one corporate umbrella?

PV: I think today we have three different brands but one corporate culture, the Volvo Group culture. We have something we call The Volvo Way, which is a document that sets out how we work with each other and how we treat each other. That goes for everybody – that's a brand-independent document.

So that's internally, but then the challenge over the years has been moving from the old corporate culture to the new one, and that has been a gradual process.

Today that is not an issue anymore and I think we illustrated that at the Brisbane Truck Show. In 2013 we had three different stands next to each other – a Volvo house, a Mack house, and a UD house – but this year we moved to the one Volvo Group house, basically like a dealership.

I see it like this… We have a Japanese brand; we have an American brand; and we have a Swedish brand – and let's not forget we have a French brand in Renault. And the brand proposition, the brand's experience – that will never change. If you sit in a Mack it has a very American look and feel and if you sit in a Volvo it looks completely different. That will absolutely not change.

The three ranges complement each other. UD is playing in the medium-duty segment and the light cab-over heavy-duty segment; Mack is playing in the conventional heavy-duty segment and Volvo plays the whole cab-over heavy-duty segment, so they fit together well.

TS: Have you met with [incoming global Volvo Group President] Martin Lundstedt yet?

PV: [laughs] He doesn't work for us yet! He starts with us in October – he's in the 'cool-down zone' between Scania and Volvo. So if I said 'yes' then we have a big problem! But no, I haven't seen him yet and he hasn't started yet, and I haven't met him previously.

We're all looking forward [to his arrival], of course – you need to have a leader.

I think we were as a Group happy with what Olof Persson had been doing for us, with driving the whole efficiency process, but the Board at Volvo took a decision that we needed a bit of a different focus, and that's also good.

He's a truck man too so I think we're all looking forward to that.

TS: Ex-pat executive postings are traditionally cyclical – will you continue as President of VGA for some time to come?

PV: Oh absolutely; I'm having the time of my life! This is a very big market and it's a very important market, so when you get in here you literally need some time to get your arms around the country – to meet the customers, to meet the dealers.

TS: You've grasped it now?

PV: Yes. I think in the first four or so months I met about 200 customers… Of course I didn't meet all of them but I met a very large part of our customer base, and not only in conference but in person – I even delivered two trucks single-handedly.

But the thing is I feel I have a connection now, I'm starting to know them, and then you cannot go – that would be very strange.

And then of course people ask me, 'Well how long are you going to do this?', and I have no idea. Most MDs normally do a job for anywhere between say four and seven years and if we then go back to Volvo Group Australia and look at my predecessors, most of them were here for around five years.

But my family and I are very happy here so no, I have no plans to go.