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Volvo’s hugely important link with Dongfeng passes regulatory muster

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The addition of Dongfeng Commercial to  the Volvo Group creates a potentially  world-leading alliance.In his monthly review of global news for local truckers, FRANK BEETON updates the Volvo/Dongfeng partnership while discussing some of its prospects, takes a modern-day look at Mack (the Bulldog brand), and comments on reports of Hyundai’s commercial vehicle plans

Last October, while carrying out our assessment of future prospects for global truck manufacturers, we had this to say about the Volvo Group:

“Early in 2013, it was announced, in a highly significant move, that Volvo had paid $US 890 million for a 45 percent shareholding in Dongfeng Commercial Vehicles in China. This association was a logical progression, given that UD Trucks and Renault Trucks already had connections with Dongfeng. The implications of this association included the creation of a potentially world-leading alliance (in 2010, Dongfeng was already at the top of the > six-tonne GVM world rankings with more than 300 000 unit sales).

“Recent media reports have suggested that the formalisation of this relationship is imminent, and its subsequent rolling out into the global environment will be of immense interest to industry observers.”

In late January 2015, Chinese government regulatory approval of Volvo’s investment in the DFCV joint venture was confirmed. In the supporting media release announcement, AB Volvo’s president and CEO, Olaf Persson said: “This strategic alliance is a milestone and entails a fundamental change in the Volvo Group’s opportunities in the Chinese truck market, which is the largest in the world. At the same time, it will provide the opportunity to become involved in growing DFCV’s international business in a manner that will benefit us and our Chinese partner”.

The media release went on to say that representatives of both companies would make up the JV’s board of directors, with Dongfeng providing the chairman, and its Dongfeng-branded product line-up would include heavy and medium trucks, buses, special-purpose vehicles, and their constituent components. Volvo will provide technological support and global sales experience.

As we pointed out last year, Volvo AB has risen to become one of the most influential groups in the global commercial vehicle business, with a portfolio that includes Volvo Trucks and Buses, Renault Trucks, UD Trucks, Mack Trucks, Eicher Trucks, Prevost Buses and Nova Buses, in addition to some marine and construction-related products.

Volvo’s global structure has assigned clear lines of major geographic responsibility to Mack for the Americas; Volvo/Renault for Europe, the Middle East and Africa; and UD for the Asia-Pacific region.

However, the rolling out of this strategy is still a work in progress, and it will be very interesting to see how Dongfeng fits in. Clearly, adding DFCV’s enormous volumes into the Volvo Group “mix” (the Chinese manufacturer sold more than 170 000 medium and heavy trucks in 2013) will provide substantial opportunities for component and cost sharing, and broaden the portfolio of product availability.

Bearing in mind the relative historic concentration of Volvo, Renault, Mack and UD at the upper end of the payload spectrum, there appears to be a huge opportunity to play more substantially in the light and medium truck sectors, building on the still-unfolding efforts of Eicher in that arena.

Given the magnitude of the task, Volvo’s still-emerging global strategy has, understandably, been quite a drawn-out process. One of the most important elements to have materialised, thus far, has been the global engine programme, which took shape during the first decade of the 21st century, through the use of common 11- and 13-litre engines across the Volvo, Renault and Mack ranges.

More recently, we have seen the Volvo Group’s “Common Architecture Shared Technology” programme initiated in the form of new five-, seven-, 11- and 13-litre power units developed by Volvo Powertrain in Ageo, Japan. It was also announced that VE Commercial Vehicles (the Volvo-Eicher Indian joint venture established in 2008), would act as the production source for 85 000 of these engines each year.

There have been other areas of product exchange, including the supply of Volvo’s 16-litre engine to Mack, for installation in its own products with MP10 branding, and the use of Volvo’s I-shift automated transmission technology in some Mack, UD and Renault products.

As intimated earlier, Dongfeng has been working with manufacturers now residing within the Volvo Group for some time. In fact, the initial cooperation with Nissan Diesel (now UD Trucks) was established in 1985, and in 2002, RVI (now Renault Trucks) licensed the manufacture of its 11-litre diesel engine to the Chinese group.

From this we can assume that Dongfeng is no stranger to Western manufacturing processes and quality standards, and should be able to do anything asked of it, by the present-day Volvo Group, with little disruption.

The prospect of Dongfeng products being distributed by Volvo and its subsidiary brands in export markets is, therefore, very real. We can only say that the formalisation of the Volvo-Dongfeng alliance is probably the most significant single event to have occurred in the global truck industry for a number of years.

Where is Mack?

While several of the Volvo Group brands are currently active in the South African market, and others appear likely to arrive soon, there is one significant absentee: Mack Trucks.

The Mack Granite handles vocational applications in the North American market.Mack trucks, with their distinctive bulldog bonnet mascots, were something of a novelty in South Africa until 1973. They then went on to become very successful players in the local market, primarily as extra-heavy-duty prime movers.

The most important feature of Mack trucks, at that time, was the combination of Maxidyne high torque-rise diesel engines and five or six-speed triple-countershaft transmissions – while most of the company’s American competitors specified nine-, 13- or 15-speed multispeed gearboxes.

Somewhat surprisingly (to the competition), the Mack recipe, with its considerably reduced workload demand on drivers, delivered class-leading performance and fuel economy, and was soon established as the favoured choice in many prominent fleets. Unfortunately, with the compulsory introduction of Atlantis Diesel Engine fitment in South Africa from 1982 onwards, the punitive duties that were attracted by non-compliant vehicles argued against Mack’s continued use of its own power units, thereby cancelling out its technical advantage. In due course, Mack departed from the local market.

Over time, the Maxidyne philosophy fell foul of ever-tightening international emissions standards, and Mack reverted to more conventional driveline thinking. In 1979, Renault initiated a progressive takeover of Mack Trucks, and completed the process, under the RVI banner, in 1990. Mack then passed, along with Renault’s other trucking assets, into Volvo ownership in 2001.

The brand had many enthusiastic supporters, and there was widespread concern that it might disappear completely under foreign ownership, especially as Volvo had its own American truck-making operation, following the takeover of White Motor Corporation in 1981, and the absorption of GMC and formation of Volvo GM Heavy Truck Corporation in 1988.

In 1997, Volvo bought out the General Motors shareholding, and has operated in the United States (US) under its own name ever since. The Mack brand has prevailed however, and continues today as a fully fledged member of the Volvo Group.

The current North American range has imaginative model names, such as “Pinnacle” (on-highway hauler), “Granite” (vocational applications), “TerraPro” (cabover/low-entry refuse/vocational), and “Titan” (heavy haulage), while power is provided by 11-, 13- and 16-litre Volvo Group engines, designated MP7, MP8 and MP10, respectively, in their Mack identities.

Mack also builds and markets trucks in Australia, and the Granite and Titan names are used there too, to do similar work, but (predictably) hauling heavier tonnages than their siblings back home.

Mack Australia also has its own unique models, namely “Super-Liner” (road trains and interstate haulage), “Trident” (B-Double and “tipper and dog” applications), and the “Metro-Liner”, which comes in rigid 6x4, 8x4 and 10x4 configurations, albeit with its second steer axle placed under a normal control (bonneted) cab. This model is configured specifically for (relatively) light construction and regional distribution tasks.

Will Mack ever come back to South Africa? It seems unlikely, given the plethora of other Volvo Group products already here, or potentially on the horizon, and that Mack exclusively uses a bonneted layout for all its models.

The equivalent products from other US manufacturers achieve only limited acceptance locally, because of their limitations when used in full-length interlink combination applications, and the difficulty of achieving optimum payloads and load space on bonneted vehicles.

However, there is no doubt that Mack remains an iconic name in the trucking community, and the appearance of the bulldog mascot on any special import will always be a matter of considerable interest to local enthusiasts.

Hyundai about to become bigger in commercials?

Overseas media reports have recently suggested that Hyundai Motor Company is planning a major new offensive on the global commercial vehicle market. The reports say that the South Korean company will spend around $US 1,8 billion (R21,6 billion) by 2020 on increased production capacity in its home country, and research and development relating to vans, trucks and buses.

Hyundai’s Xcient heavy duty truck range includes numerous axle configuration alternatives.According to Reuters, the Hyundai family, including Kia, currently holds only 2,1 percent of the global commercial vehicle market outside of China, and will be looking to this market to help drive it from its current global production level of around eight million vehicles per annum, to a target of 10 million.

The group currently manufactures a comprehensive range of 4x2, 6x4 and 8x4 trucks with power ratings of up to 390 kW (520 hp), as well as city buses and touring coaches. Local readers will be familiar with the H100 light truck, H1 panel van, Kia K2500 and K2700 light trucks and Hyundai HD series of MCV load carriers marketed in South Africa.

The heavier Hyundai models are currently restricted to South Korea, China and certain emerging markets, although South Africa did receive some Hyundai coaches during the run-up to the 2010 Soccer World Cup.

At the mid-September 2014 opening of its Apex assembly operation, Hyundai Automotive South Africa said that it was studying the possible introduction of the latest generation Hyundai Xcient heavy-duty truck range to the local market.

In February, we provided preliminary details of Hyundai’s new H350 integral 3,5 t gross vehicle mass (GVM) panel van. The Turkish-built H350 is aimed squarely at the European market. However, the recent migration of several Eurovan designs across the North Atlantic suggests that the H350 has the potential to follow them there.

Of even more importance to Hyundai’s North American aspirations, is the Santa Cruz crossover truck concept that appeared at the 2015 North American International Auto Show in Detroit. This was something entirely different to a number of Hyundai pickup concepts that had been seen before, and the manufacturer stressed that, with no emphasis on ground clearance or towing capacity, this vehicle was not intended to be truck-like.

Based on the new Tucson crossover utility (CUV) platform, the small pickup concept is said to be aimed more at “younger buyers” than the latest generation compact pickups, typified by the Chevrolet Colorado. Features of the concept include aggressive styling, an extendable tailgate, a 2,0-litre turbodiesel engine, upright hexagonal grille, honeycombed headlamp projectors and rear-hinged doors.

It seems that, following very extensive research, Hyundai is looking at a new market niche, which is more closely related to the CUV segment than any genuine truck category. It is clearly aiming at recreational rather than business use, and at buyers who would like a basic CUV package with an open load box.

If sufficient consumer and media interest is forthcoming from exposure on the US auto show circuit, Hyundai is ready to get cracking with a production version on an accelerated basis, cutting the normal four-year product launch cycle to three years. The possibility of opening up the Santa Cruz to global markets is also on the cards.

The foregoing is evidence of a rather scattered approach to increased penetration of the global commercial vehicle market, but it is a start, nevertheless. It can be safely predicted that the intended research will result in a more rational strategy, with Hyundai targeting markets and segments where it sees the greatest opportunities.

There is a great deal of disparity between the marketing of CUVs in North America, and selling heavy-duty trucks anywhere in the world, and this is sure to result in the emergence of a structured approach. Hyundai will be looking to its remarkable growth to fifth position in the global vehicle industry for inspiration, and will, no doubt, expect similar levels of success in respect of its commercial vehicle aspirations.

 


Global FOCUS is a monthly update of international news relating to the commercial vehicle industry. It is compiled exclusively for FOCUS by Frank Beeton of Econometrix.

 

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