What is a good nationality to have in charge when you enter a crisis?
Well a Brazilian might be a good candidate, as down the years the South America country has had more than its fair share of shocks—social, political, liquidity, devaluation—and we are no stranger when it comes to crises. Being a proud Brazilian myself, I have found myself in a habit of starting new jobs just as major external shocks hit the industry.
In 2007 I became Managing Director for the Volvo Financial Services (VFS) business in Mexico. Before my name even appeared on my office door, the Financial Crisis had arrived—challenging me with managing a business with sales down 80% and the banking sector in the midst of a liquidity crisis. As if that weren’t bad enough, we also had a Swine Flu outbreak—and were placed in lockdown for two weeks, with all of my team working remotely from home.
On March 16th of this year, I started the biggest job of my career—President of Volvo Financial Services—the first Brazilian to hold the role. But before my name had even appeared.... you know the rest. Global pandemic, markets and society in lockdown, sales volumes falling off a cliff, offices closed and everyone working from home. It wasn’t exactly the start I was expecting...
Doing the right thing
Looking back, my previous disaster recovery experience has been very valuable. I believe that it is easy to be friends when times are good. It is when times get tough that you show you are in it for the long haul. Overall, I think the whole finance industry has done well in this crisis, providing liquidity and keeping calm. In our business we are always evaluating risks and scenario planning the next downturn. And while we didn’t foresee an economic shock as big as this one, we already had a good plan in place, and that is what we have been rolling out these last few months. We already had the playbook, so what was needed from me was calm guidance and quick decision making to cope with the rapidly changing circumstances. We didn’t always know all the facts or all the answers, but that is okay, we continually adapt the plan as we learn more.
“I do not believe that the business has changed fundamentally. But society is changing and the pandemic has accelerated some of the trends that were already beginning to happen.”
One of the key things we’ve done is to keep close to the customers and understand their needs. With business activity much lower, many customers are trying to protect their cashflows. We get that and have offered payment holidays and a range of other support. Where some governments have legislated for a moratorium on loan repayments for several months, we are happy to hit the the “pause” button. I am on the side of the little guy—in fact, I am a little guy myself. I am one of eight children and I started work at 14, and went to night school to get my first degree—the first in my family to get one! I understand that if trucks aren’t trucking and construction equipment isn’t working, then repaying loans is difficult.
Reputations are worth protecting
Being a captive finance house has its advantages. It is not just our reputation that is on the line, but those of the 12 Volvo Group brands we support worldwide*. We really understand our customers and taking care of them now will result in increased brand loyalty, as well as additional product and service purchases in the long term. That is one of the reasons why captive finance houses tend to grow market share during downturns. We have seen that during this crisis—sales volumes are down for sure, but finance penetration has gone up.
I do not believe that the business has changed fundamentally. But society is changing and the pandemic has accelerated some of the trends that were already beginning to happen. The biggest of this is digitalization, with us introducing new digital support options, virtual meetings and other initiatives to make lending easier in a world of social distancing. We are also piloting how AI can help with repetitive activities, speed up the processing of applications and evaluate risk in a more efficient way. I do believe that in our business, close personal relationships and really knowing our customers will remain the order-winning criteria, but digitalization can help make the journey—from purchase to repurchase—better, simpler, faster and more convenient. This crisis has shown that we need to move this digital transformation up our list of priorities.
Dust ourselves off...
With the world opening up, people getting back to work and massive stimulus programs in many countries set to underpin damaged economies, there are real grounds for optimism that we have weathered the worst of this downturn. Battered and bruised, perhaps, but we have kept the faith with our customers, maintained the business in good shape, and realized once again what a great, committed and flexible team of high-performing colleagues I have.
*The Volvo Group brand portfolio consists of Volvo, Volvo Penta, UD Trucks, Terex Trucks, Renault Trucks, Prevost, Nova bus, Mack and Arquus. It has alliances and joint ventures with the SDLG, Eicher and Dongfeng brands.