The consistent rise in demand of construction equipment kept truck sales rising for Volvo. The Swedish automobile manufacturer, according to Market Watch, saw third-quarter net profit exceed expectations. Demand remained high with truck orders shooting up to 32% in the quarter.
Chief Executive Martin Lundstedt attributed much of the demand to the recovering mining industry in Asia. There was also notable higher demand in North America and Europe due to increased spending. “Volvo Construction Equipment has successfully managed to respond to the growing market demand with a volume increase of 48% while at the same time taking a significant step up in profitability.”
Freight rates have been increasing in North America with healthy economic conditions seen mostly in the regional-haul and long-haul markets, indicating more business to come out of these sectors. Volvo sees sales of heavy duty trucks reaching the 260,000-unit mark by 2018 in North America alone.
Profits reported by Volvo were 5.47 billion Swedish kronor (SEK) or $673 million as of quarter-end. That is twice the profits earned in the same quarter last year at SEK2.59 billion. It also exceeded expectations set in a FactSet poll by 1 billion with the number provided at SEK4.47 billion.
More trucks are being sold, which is leading to optimism heading into 2018. An analyst from the Stifel Financial Corporation, Michael Baudendistel, agrees. “We could see the return of the large fleets to the marketplace in fall 2017 for equipment to be delivered in 2018, and we believe that trend is only likely to gain steam in 2019 and 2020.”
Volvo also recently added a new outlet in Vanguard Truck Center, located in Houston, Texas.
Bruce Kurtt, the senior VP of Sales for Volvo Trucks North America, viewed the partnership with Vanguard Truck Centers as beneficial. “Vanguard Truck Centers has played a key role in supporting the success of Volvo Trucks customers for many years.” Kurtt reiterated further, “We know Vanguard is committed to delivering the highest level of service at all its dealerships, including this newest location in Houston.”