Founded in 1927 and headquartered in Gothenburg, Sweden, the Volvo Group’s mission is to drive prosperity through transport solutions.. The Group has been driving prosperity by offering trucks, buses, construction equipment, power solutions for marine and industrial applications, financing and services that increase its customers’ uptime and productivity. T Murrali of AutoParts Asia caught up with
Jan Gurander, Member of the Executive Board and Deputy CEO of Volvo Group, during his recent visit to India. In an interaction he said, “We should do all that is required in the long-run to make Volvo a sustainable company that makes profits for a prosperous future. We have to consider products, services, the environment, our employees, customers, our competencies and many other factors that contribute to sustainability. We have to do things right, and have to be mission and purpose-driven. If we do all these the group will be profitable and we will be able to make further investments.” Edited excerpts:
Q: With challenges from different quarters including cost, emissions and increasing customer expectations, what are the options that Volvo has to drive prosperity through transport solutions?
Gurander: An interesting question. When you talk about growing countries like India the need for better transport of people and goods is always required. Obviously, some things like good infrastructure have to be in place to have an efficient logistics system.
India is putting more and more investments into infrastructure right now. Then there are environmental issues which are widely discussed nowadays as also their effect on transport systems worldwide. With BS-VI coming in efficiency would depend on better products, good infrastructure.
Q: How would it be from a global perspective?
Gurander: The same elements would apply. We do see the effect of poor logistics on transport in many parts around the globe with capacities being under-utilised. Of course, total cost of ownership is the key; it would include the price of the truck, fuel consumption, maintenance costs and other parameters in the vehicle lifecycle. All these are taken into account in developed countries but in developing countries like India price of the truck is still a major factor. Uptime is also very important; good infrastructure and logistics would definitely help in keeping the truck on the road for longer periods, which is what customers want.
Q: Global truck manufacturing is only increasing marginally at one or two percent per annum. Europe is registering meagre growth. Would this not affect the truck industry and business?
Gurander: We have a growing population and GDP so there will always be a rising demand for transport. That will not be sustainable at the end of the day due to negative factors like traffic congestion, emissions and other environment issues that have to be taken into account. We have to take a long-term view on all this and ensure that trucks are loaded to full capacity before moving out, so that we transport more with less and reduce the negative impacts mentioned.
Q: What would be the role of Volvo?
Gurander: Our services would help increase uptime, ensure better fleet management and support many other points across the transport value chain to improve efficiency. We could help in various extended services such as freight brokerage systems though we are still not sure whether we should run it ourselves or help others in doing so. Many customers have different brands of trucks so our focus would have to be on multi-brand support. These are issues that have to be looked into.
Q: Globally, there are several megatrends followed by different industrial segments, the common thread being to go green, get connected, etc. What is driving Volvo?
Gurander: We are always driven by sustainable transport solutions in the long-run. We work on emission regulations and focus much on the NOX particulates as specified in BS-VI and Euro-6 norms.
Next, coming up, are the regulations on CO2. All these would contribute to a sustainable future and that is what we focus on.
Q: From Volvo’s point of view, what is the next step?
Gurander: CO2 and greenhouse gas effects; it’s a big challenge for the industry.
Q: Can you tell us a little bit about the work going on to reduce CO2?
Gurander: Basically, you have to look at the whole vehicle and consider factors like the rolling resistance, aerodynamics and every detail of the vehicle as carbon dioxide is more or less one-to-one with the fuel consumption. Everything that improves fuel consumption will bring down the CO2; cost of operations would also come down. It would help society at large from the efficiency point of view. That’s why total cost of ownership is very important.
Q: Coming to connected vehicles, what is Volvo’s experience so far and your future plans?
Gurander: We plan to have a million connected vehicles by end of this year. We get a lot of information from the vehicle sensors and we need to find ways and means to use this information so as to support our customers even better. We can develop different types of services – uptime being one – to make sure the customer does not undergo unplanned stops. On-board computers connected to the back-end help us in doing this, with much information displayed on the dashboard too. We always strive to avoid unplanned stops in the very first place and in case they do happen the aim is to bring the vehicle back on the road quickly. Connectivity and Connected Vehicles help in this regard. The priority at all times has been to improve ways to satisfy the customer. We also use the data from different sources to improve the performance of the truck itself.
Q: There have been discussions on data sharing to the third party and the aftermarket. What is Volvo’s stand on this?
Gurander: This is a tricky area as it is governed by protection rules. In Europe we have the GDPR. You need to have perfect control over the information – who owns it, who can have access to it, who can use it, etc.
Q: It’s all still in a fluid state, nothing concrete has emerged…
Gurander: In Europe you need to have agreements; you cannot track drivers at random. There are many rules to be followed.
Q: From the aftermarket point of view, can data generated by the vehicle on health parameters of drivers be shared by the OEMs with fleet owners?
Gurander: In some markets the data belong to the fleet owners; there are different rules for different jurisdictions. We follow the market; that’s always the starting point. We want to provide data in relevant package forms to the customer so that he sees there is a definite value coming from us which would be of advantage to him. First and foremost we want to create value for the customer.
Q: Data collection and mining consumes a lot of manpower. Artificial Intelligence can also be used here. Do you see a substantial spend on this division in the future?
Gurander: Digitalisation and use of advanced analytics is very necessary today. Large amounts of data have to be correlated to get useful information. AI is of course very helpful here with many new technologies coming in. It’s a competency that all of us must have. It’s more an investment in knowledge for the latest in technology.
Q: Volvo has always been a company propagating safety for ages but still more could be done, for example, attaining zero accident level. What is in store for Volvo?
Gurander: For the Volvo brand we have three core values – safety, care for the environment and quality. Safety is deeply rooted in our DNA right from the time the company was founded in 1927; we were the ones who invented the three-point safety belt. This is something we carry forward into all our products today, including trucks and buses.
We have an initiative in India to build a collaborative platform to address safety from all aspects, not only from the vehicle viewpoint but also from the perspective of roads, surfaces, pedestrians and traffic behaviour. Sensors and detection systems are very much a part of safety. We try to go beyond that to see if we can prevent accidents before they happen, considering the number of casualties due to road accidents that take place every day. We are committed to support the global targets to cut fatalities by 50 percent, which is an ambitious step. Safety will always be a key part of sustainability for us, at all times.
Q: Coming to research, earlier the fruits of R&D could be easily commercialised and the ROI was faster. With so many disruptions today, it appears that you end up spending more and the ROI appears to be a little away. In this scenario what is the key driver for Volvo to invest on R&D?
Gurander: It’s a challenge. The business as it is today will continue for quite some years till everything becomes electric and automated. We will continue to develop cabs because we will not see trucks without drivers for a long period of time, maybe till Euro-7 comes in. For new business models and technologies, from electric mobility, self-driving trucks and connectivity to AI, the ROI would have to be figured keeping all this in mind to ensure the business is profitable so that further investments could be made. The new models may not generate money today but we have to work clearly to make sure they are cost effective tomorrow. That’s the challenge.
We must work efficiently with pilots to understand the business models and what is good for the customer. Presently we are developing electric vehicles with Skanska, one of the big construction companies in Sweden; we have developed self-driving dumpers with much automation in the vehicle. The cost of operation has been brought down by 40 percent. We will have to scale up this model to make it viable on a macro level and ensure it is sustainable. We have to be agile, work with speed, scale up, stop things that don’t work, and look at so many other facets to get the right mix. We have to live with the fact that we need to invest more on R&D in the years to come.
Q: Is CampX part of the NewGen initiative?
Gurander: Yes, it’s a new way of working to improve internal work related to new technologies. It’s an open arena where we invite startups, suppliers, and academia who can work within our premises in a very open environment. Our engineers engage with them building networks and finding relevant solutions for various issues. We cannot afford to be a closed company; we have to cooperate and create partnerships.
Q: These types of initiatives have been taken by conglomerates around the world not only in automotive but other segments like aviation. Is Volvo considering taking people from other industries to take advantage of their out-of-the-box thinking?
Gurander: You get a lot of out-of-the-box thinking when you work in these ecosystems because many ideas have come from the incubators and startups, and not from the logistics industry. That is the idea behind Camp-X, to get suggestions for different levels while taking into account the ecosystem.
Q: How do you see Volvo with its nine divisions evolve in the next 10 years? From which region in the world would you get more revenue?
Gurander: We have 15 to 30 percent market share in the regions where we are active. Geographically, our growth would come from India and China, perhaps Asia as a whole. China’s truck market has crossed one million trucks a year and in India it’s around three lakhs. These trends indicate that the logistics industry will grow well in these regions and the experience of the Volvo group would complement this. We could provide products and solutions that would fit much better when you have a developed infrastructure. The idea is to provide sustainable logistics for the future. We will have a growing customer base which in turn would reflect in increased revenue.
Volvo is well-positioned with its brands and premium products. We work closely in our JV with Eicher in India to produce trucks for specific applications and this cooperation will continue to grow going forward. The same goes for China where there is a growing segment for superior trucks.
Q: You emphasise on gradual and consistent earnings. Would it be a conservative approach or a practical one?
Gurander: We should do all that is required in the long-run to make Volvo a sustainable company that makes profits for a prosperous future. We have to consider products, services, the environment, our employees, customers, our competencies and many other factors that contribute to sustainability. We have to do things right, be mission and purpose driven. If we do all this the group would be profitable which would help us make further investments into the future. Transformation is the link to better returns; that’s what we follow. As of now, for 18 quarters running Volvo Group has witnessed improved performance.