Volvo cuts prices by 15%
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by Lee Kimber • Owner-drivers and small operators are expected to gain most from Volvo's decision to cut its list prices by 15% in a bid to end rampant price discounting.
The company claims the move will take the mystery out of list prices and discounting, which it says have become irrelevant to truck purchase negotiations. "All sides lose a lot of time getting down to the nitty gritty," says Volvo's Trevor Longcroft. "If you can eliminate the hot air everyone will benefit."
Cutting list prices is expected to be of most use to smaller operators with less clout and knowledge of where manufacturers will yield on price. But Volvo says its prices will still be negotiable and will ultimately depend on the exact specifications of the trucks.
But other manufacturers say the move will make little difference to prices because the supply of trucks still outstrips demand.
"All Volvo has done is reduce the retail price so they'll give less away in discounts," says one competitor. "It's just a different way of trying to harden up prices."
Leyland Daf marketing manager Tony Paine says his company has no plans to follow Volvo's lead but will keep an eye on the result. "I believe, and most operators believe, that it's net selling price that really matters," he says. Mike Mudie, chairman of the Retail Motor Industry Federation's national truck committee, says Volvo's decision might encourage buyers by making the real price of trucks more obvious, but he adds that current discounts are much higher than 15%.
He warns that Volvo's price cuts could make it harder for operators to negotiate any deals complicated by service or back-up agreements.