Driving Profitability: How Volvo Trucks Optimizes Spare Parts Pricing
Here’s how Volvo Trucks leveraged Vendavo’s strategic pricing solutions to balance rising costs with market competitiveness, achieve value-based pricing precision for their spare parts business, and enhance efficiency with phased AI integration.
Highlighted Business Outcomes
Optimized pricing for spare parts
Adopted value-based pricing to address rising costs, enable precise price adjustments on spare parts, and preserve competitiveness
Increased efficiency and agility
Phased adoption of AI-driven pricing tools for efficient, data-backed changes to better navigate market fluctuations
Strengthened margin stability
Balanced targeted price adjustments with competitive positioning to safeguard margins and reinforce market position
Overview
Volvo Trucks is a global leader in truck manufacturing, renowned for its commitment to quality engineering and sustainable transport solutions. The company is headquartered in Gothenburg, Sweden, and operates across multiple international markets. They aim to continually innovate to maintain their competitive edge. Volvo Trucks partnered with Vendavo to achieve value-based pricing precision and enhance efficiency with phased AI integration.
The Challenge
Volvo Trucks faced challenges in aligning their pricing strategies with escalating production costs while preserving market competitiveness. Their primary objective was to implement a value-based pricing model that could adapt to increased cost levels without compromising market position. The company also sought to explore the integration of AI into its pricing processes to enhance decision-making and efficiency.
We’re exploring where we can use AI in our pricing. Starting small is critical. Incremental steps help us build confidence and bring the team along without handing over all control to AI immediately.”
Anders Hellman
Director Parts Pricing & BI Management
The Solution
Vendavo helped to facilitate development of a value-based pricing strategy for Volvo’s spare parts that responded effectively to cost pressures without compromising customer satisfaction or competitive standing. Volvo focused on strategically adjusting prices across their product portfolio to protect market competitiveness while implementing necessary price increases on specific products. They also adopted a phased approach to integrating AI into their pricing strategies, starting with small, incremental applications. This allowed Volvo’s pricing team to build confidence and gradually enhance their pricing models with AI-driven insights.
It’s all about finding that balance across the portfolio, knowing where we can implement increases while protecting our most competitive products.”
Anders Hellman
Director Parts Pricing & BI Management
The Results
Volvo Trucks successfully implemented a value-based pricing strategy that aligned with cost adjustments in a competitive manner. The targeted approach to price increases on specific products enabled margin protection without a need for blanket increases across all offerings. The phased integration of AI into pricing strategies improved their pricing team’s engagement and innovation. It allowed the team to explore AI’s potential while maintaining control over key pricing decisions. Volvo plans to build on the success of this approach, integrating AI into their pricing strategies to explore new innovations for sustained growth and profitability.
About Volvo Trucks
Overview
Volvo Trucks is a global leader in premium transport solutions, offering a full range of medium- and heavy-duty trucks. With headquarters in Gothenburg, Sweden, and operations in over 130 countries, Volvo Trucks is supported by a global network of dealers and 2,200 service points. Trucks are assembled in 12 countries worldwide, with approximately 145,000 units delivered in 2023. As part of the Volvo Group—one of the world’s leading manufacturers of trucks, buses, construction equipment, and marine and industrial engines—Volvo Trucks also offers complete solutions for financing and service. Guided by core values of quality, safety, and environmental care, Volvo Trucks is committed to helping customers achieve operational excellence and sustainability.
Fast Facts
Website: www.volvotrucks.com
Industry: Manufacturing
Region: Global
Headquarters: Gothenburg, Sweden
Employees: 52,000
Revenue: $29.7 billion
Products used: Vendavo Pricepoint