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Volvo diversifying market in Indonesia

Publication Date : 28-03-2014


PT Volvo Indonesia, a unit of Sweden-based truck maker Volvo, says it will boost the sales of its UD Trucks in areas outside the mining sector in a bid to see business growth this year.

Orders for trucks from the mining sector have declined due to slowing mining activities, particularly coal, due to weak global demand.

PT Volvo Indonesia president director Pierre-Jean Verge-Salamon said on Thursday the company aimed to increase sales of the vehicles in construction, general cargo and the forestry and agriculture sectors, where demand would primarily be driven by the rapid development of infrastructure, export and import activities, food consumption and the mechanization of agriculture.

“We want to be bigger in all these segments. We should be less mining-dependent to a certain extent,” he told reporters in a press briefing at his office.

Volvo, which sells trucks under the Mack, Renault and UD Trucks brands in addition to its own name, delivered around 2,500 units nationwide last year, composed of 2,200 heavy duty trucks and 300 medium duty trucks. That was approximately 28 percent lower than the figure recorded in 2012.

Verge-Salamon said the lower demand for trucks from the mining sector may further decrease this year with the government’s ban on unprocessed mineral ore exports starting in mid-January.

Verge-Salamon declined to give details of this year’s sales target, saying that to boost this year’s sales, Volvo would roll out a new product range by the end of this year. The company would also expand its domestic service network nationwide and provide customer support in Kalimantan through a new spareparts facility in Balikpapan, East Kalimantan.

The spare parts facility was built with a US$10 million investment, aimed at serving the most demanding customers with the highest mining activities.

“Indonesia has been a strategic market for us. We are extremely positive about Indonesia and it’s our responsibility to make it happen,” Verge-Salamon said.

At present, UD Trucks holds the second biggest share in the Indonesian truck market, which has tripled in size in the past five years. Its competitors include Japanese brands Hino, Mitsubishi and Isuzu.

The sales of UD Trucks in Indonesia are the second largest contributor to the global sales of UD Trucks brand worldwide after Japan.

Volvo now has 44 outlets for UD Trucks nationwide, consisting of 11 owned-dealers, 11 private dealers and 22 authorized workshops, run by its authorized distributor PT Astra International Tbk. In addition, there are also 44 owned-branches and site support operated by its authorized dealer, PT United Tractors Tbk.

Ernando Demily, CEO of UD Trucks head office at PT Astra International Tbk., said his firm was mapping out the potential locations to expand its outlets, but there was no plan to develop the new outlets amid the economic slowdown.

“We are monitoring the ongoing situation and are looking into future market potential,” he said, adding that non-sector mining still offered prospective growth outlook.

Astra outlets, which are mostly located in Java, heavily serve customers in on-road uses, such as general cargo and logistics.

Last year, it spent 70 billion rupiah ($6.11 million) to build five outlets in five cities: Bekasi (West Java), Banjarmasin (South Kalimantan), Palembang (South Sulawesi), Pekanbaru (Riau) and Surabaya (East Java).


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