Volvo to buy Renault VI/Mack

Acquisition makes Swedish truck maker number two in heavy trucksUnder a $2-billion deal announced late last month, AB Volvo will exchange 15% of its shares for 100% of Renault's truck business, Renault VI/Mack. Although it will probably take the rest of the year to finalize the deal and gain the needed regulatory approval in both Europe and the U.S., the transaction would double Volvo's global truck

Acquisition makes Swedish truck maker number two in heavy trucks

Under a $2-billion deal announced late last month, AB Volvo will exchange 15% of its shares for 100% of Renault's truck business, Renault VI/Mack. Although it will probably take the rest of the year to finalize the deal and gain the needed regulatory approval in both Europe and the U.S., the transaction would double Volvo's global truck business and make Volvo Trucks North America the number-two heavy truck maker in the U.S.

Observers say Mack would be a good fit with Volvo in North America since they have complementary product lines with little overlap. While Mack is strong in vocational trucks and local and regional vehicles, Volvo has a strong presence in the LTL and sleeper longhaul tractor markets. The two also take a vertically integrated approach to truck building, producing their own major powertrain components.

"As a former longtime Mack dealer, I could not be more pleased to be associated with Mack Trucks again," said Marc Gustafson, president and CEO of Volvo Trucks North America. Gustafson also served as executive vp-sales and marketing for Mack Trucks and president of Mack Trucks Canada before coming to Volvo Trucks North America in 1996.

Speaking at a press conference last month, Gustafson said Volvo would continue to market and maintain both the Volvo and Mack brands, and that both brands will keep separate sales and parts networks. Despite bringing Mack into its family, Volvo still intends to launch its own new vocational chassis in July, he added.

Other plans for the future, including rationalizing engine and other major component production, have yet to be determined, Gustafson said. Volvo, Mack, and Renault VI each currently have their own diesel engine lines and production facilities.

The official announcement of the deal by AB Volvo pointed out that the three operations' "powertrain, purchasing, and product development will be merged," but provided no other details. It added that "opportunities for major savings have also been identified in the engine sector by adopting joint engine programs to the different brands."

Industry observers say it is too early to tell what the short-term effects would be for each company, either in North America or globally.

However, the merged truck business will clearly be a strong competitor throughout the world. The combined market share for Volvo and Renault VI heavy trucks in Western Europe will amount to about 28%, while the combined heavy-duty share in North America will be about 24%.

Volvo Trucks North America Inc. is ramping up a new service for truck operators with three simple words: cost per mile. Long used by European truck fleets, cost per mile, or CPM, essentially means the truck manufacturer assumes all maintenance responsibilities and costs for a fleet's vehicles, then charges the fleet based on a cost-per-mile rate structure. Included are parts and repairs, as well as routine maintenance. This cost-per-mile maintenance program can be purchased when you buy or lease your vehicles.

After extensive pilot testing, Volvo has quietly rolled the program out over the last year. Currently available in Canada and the Southeast region of the United States, the cost-per-mile maintenance is being introduced to the rest of Volvo's U.S. dealership network starting this spring. So far, 1,600 trucks are in Volvo's cost-per-mile program.

The CPM program can also include trailers and non-Volvo tractors in a customer's fleet, along with 24-hour emergency roadside assistance, DOT reporting, and environmental compliance costs. Volvo says it is hoping to add fuel services to the program within the next 12 months, in conjunction with its partner, Petro Truck Stops.

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