SDLG one year after North American distribution debut: “The most important thing is to do it right”

Marcia Doyle Headshot
Updated Aug 23, 2016
SDLG introduced the LG948L wheel loader in July.SDLG introduced the LG948L wheel loader in July.

SDLG officially entered the North American market a year ago, a full-on test by owner Volvo Construction Equipment to offer a value-based Chinese-made product here. Retailing for 30 percent less than comparable premium loaders – a pricing strategy common among Chinese manufacturers wanting a toehold in North America – SDLG says it differentiates itself by using a select group of established Volvo dealers for sales and support.

As with any start up, it has had its challenges but the core push is still on solid ground, says Alan Quinn, director, SDLG North America. “The product has proven to be simple and reliable, and we’ve been able to take away dealer concerns over support and reliability.” With some field machines now approaching 2,000 hours, customers are also gaining a comfort level, he says.

The Volvo subsidiary now offers three wheel loaders in North America, including the 3-cubic-yard LG948L model, introduced in July. While there will be  “incremental additions” to the line, SDLG — which offers a broad range of construction equipment in China — has no plans in the short term to expand its product line beyond loaders, Quinn says. “We want to get good penetration with what we have,” he says.

All three loaders, ranging from 2.4-cubic-yards to 4-cubic yards, have well-known components, including Deutz engines and ZF powershift transmissions, which help eased dealer concerns, Quinn says. Starting out with seven dealers in nine locations last year, SDLG is now distributed by 13 Volvo dealers in 19 locations, including five locations in Canada and new dealers in Boston and Milwaukee. “We’re not trying to expand quickly,” Quinn says. “The most important thing is to do it right.”

Many of the machines have found their way into non-construction applications, such as farms, fertilizer plants, snow removal and ports, applications that typically put in less than 1,000 hours a year on a machine. “Seventy-five percent of our sales have been to customers who have never bought a Volvo.” Quinn says, a factor the company expected but which has also presented a marketing challenge. “Our customers are more of a mixed bag than we first thought. While a typical Volvo customer thinks ‘how much money will this machine make me?,’ the SDLG customer is thinking ‘how much will this machine cost?’”

For example, the company’s LG958L and LG959 models are both 4-cubic-yard machines, but the LG959 has internal wet brakes, which come at a $10,000 premium over the LG958L’s dry disc brakes. Fifty percent of those buying a 4-yard machine are now choosing the cheaper option.

Instead of requiring dealers to stock parts, SDLG uses a central parts depot based at dealer ASC Construction Equipment in Atlanta.  Customers can’t get parts off the shelf, but they can get them the next day. “Since these machines aren’t in high productivity jobs, most owners are willing to wait an extra day,” Quinn says.

Volvo started the SDLG venture here after successes in Brazil and Australia, where the crossover between SDLG and Volvo loader buyers was less than 5 percent.

The SDLG loaders give participating Volvo dealers a fuller product spectrum, Quinn says.  “It’s not been easy, but I think we’re on track to dominating the value brand segment here,” Quinn says.