Volvo hikes the cost of new plant as steel prices bite

• May
• 1

7:52 am Trucks

It is increasing the price of  new machines and components by five per cent with immediate effect.

Other plant manufacturers are thought to be mulling over the move with a view to introducing their own price increases once the effect of the Volvo announcement has been assessed.

Industry insiders claimed that rival producers would keep close tabs on the market to see if customers were willing to pay the extra cost before  increasing prices.

Volvo Construction Equipment, the plant arm of the Swedish conglomerate, produces a range of equipment including scrapers, graders, excavators and dump trucks.

The move will affect all new orders of machines, attachments and parts but existing deals will be honoured.

Executive vice president Scott Hall said price increases were inevitable as the prices of steel and other commodities were rocketing to such an extent it was no longer able to absorb these hikes. He also blamed demand across developing countries, notably China.

Mr Hall said: “Manufacturers of heavy construction equipment are being particularly hard hit by the current record prices of commodities such as steel, oil, iron ore and rubber. With no sign of commodity prices cooling, it has become unavoidable that these costs be offset.”

Colin Timms of construction plant analyst Off Highway Research said the manufacturer had introduced the price increase at exactly the right time. He said: “Because of the strength of the market at the moment - there are long delivery times and the plant manufacturing sector is running at an all time high - this round of price increases are likely to stay.”