Volvo Buses Ready for Long-Term Effects of PandemicBy Alejandro Enríquez | Sun, 04/25/2021 - 06:00
Q: How would you describe the impact of the pandemic in the heavy-vehicle sector and how did Volvo adapt?
A: In times of crisis, there are always opportunities. Volvo is positive about taking advantage of opportunities but we need to make decisions that are strong, visionary and consider the human factor. As a group, our first action was to take care of our around 10,000 people worldwide. We then gauged the impact of the situation and how to sort it out. In Mexico, Volvo Group Mexico is formed by Volvo Buses, Volvo Trucks, Volvo Financial Services, and Volvo Construction. The market in all segments changed considerably as our customers suffered an immediate impact from the pandemic.
The reaction, however, has been different from segment to segment. Volvo Buses was hit worse by the restricted movement of people than the movement of goods. Our production logistics is complex and the buses produced today were requested seven months ago, with thousands of parts coming from our more than 200 suppliers. Production is like a train that cannot be stopped immediately; there are commitments already made. Naturally, we closed our plant since the automotive industry was not labeled as essential. We reconditioned our plants in line with health measures and government standards to prepare for our reopening. ANPACT played a central role in labeling heavy trucks as an essential activity.
Our buses attend different segments. Interurban buses are our biggest segment but we also have BRTs aimed for public transportation. We have the urban bus market that includes chassis and buses for public transportation in urban areas with our Axes and ProCity models. With the pandemic, some vehicle requests were suspended but, fortunately, we had several contracts to renew some urban fleets for Mexico City.
2H20 has been mostly focused on Metrobús and also RTP vehicles as the interurban buses segment took a great hit. That being said, we have supported our customers through different schemes, including special programs conducted by our financial branch. We also acknowledged our customers who honored our deals even though their businesses were hit considerably.
Internally, we created three committees, one focused on sanitization standards, another on adapting the organization to the new normal and a third focused on how to conduct day-to-day processes. Albeit new, home office showed that productivity was not affected by remote work.
Q: What technologies is Volvo Buses developing to add more value to customers’ operations?
A: We are proactive in R&D and embracing new and clean technologies. As for diesel models, we are introducing Euro VI models, even though NOM-044 still allows for Euro V models to be sold. The public auctions we have won for RTP buses in Mexico City have been with Euro VI models, which creates a competitive advantage when it comes to environmental protection. For interurban transportation, we are proud to say that our customers consider our buses the best-performing in the market in terms of fuel. This brings benefits for the environment, while also generating considerable savings for our customers. We also have a variety of features that increase safety and comfort.
Diesel models continue to be best-sellers but in the near future we will see a more electrified mobility. Volvo was among the first companies to embrace electromobility. In many countries, there are already electric Volvo buses. We are introducing a demo electric bus at the beginning of 2021 for urban corridors.
Q: To what extend does Volvo Buses rely on exports to the US and how will USMCA influence your operations?
A: Before the pandemic, we were billing around 900 buses per year, out of which 100 to 120 were for exports with DOT certification. Our export niche has increased over the last years. The rest is for the domestic market. Regarding USMCA’s new rules of origin, there is no direct impact because we continue within the same margins.
Q: What are your views on how mobility and public transportation will behave in the new normal?
A: Many companies actually acquired more buses due to social-distancing measures, so that market niche was not affected. Urban transportation, tourism and interurban transportation were affected considerably, however. When we think about what we used to know, we can say there are always lessons learned. Naturally, customers must cope with costs and income. Let us hope lessons learned create a better scenario.
Q: What are Volvo Buses’ priorities for 2021?
A: We are going to experience 2021 that has a tougher economy than in 2020, so we are planning accordingly. Our customers have been impacted greatly and their recovery will be slow. In general terms, 60 percent of fleets remain idle, which means there is less incentive to renew them. We are expecting reduced figures in interurban transportation but we remain positive about urban transportation.
Volvo Group is a Swedish vehicle manufacturer headquartered in Gothenburg. The group has production facilities in 18 countries and has been producing buses in Mexico for 20 years.