Volvo 1997 Annual Report Download - page 24

22
Financial review by business area
Cars
The passenger car industry is one of the world’s most competitive businesses.
Increased efficiency and the establishment of new factories increased the total
capacity of manufacturers in 1997. The excess capacity varies greatly from one
segment and price class to another. A strong brand name and a well-conceived
product mix will therefore become increasingly important.
Volvo consolidated its m arket positions with a broader
product program
With a broadened and market-focused product program, Cars was able to conso-
lidate and strengthen its positions during 1997, notably in Europe and North
America. In the large-car segment – which includes the Volvo S70, V70, C70,
940, S90 and V90 – Volvo’s share of the market in Europe was 8.2% (7.8); in
North America, 10.9% (9.5); and in Japan, 2.1% (2.5). The Volvo S40 and V40,
which are in the medium-size class, had 3.6% (3.1) of the market in Europe. The
most important competitors in the world market are Audi, BMW and Mercedes.
Two platforms will constitute the base for future product programs
New products and a better product mix in 1997 gave an indication of how Cars
will be able to reach new categories of customers. In the future two platforms will
constitute the base for Volvo’s product program offering more model versions,
differentiated products and shorter product life cycles. The first car based on the
new, large platform is being introduced in 1998 and will be the first concrete
expression of the new platform concept.
Increased sales in Europe and North Am erica
A total of 386,440 (368,250) Volvo passenger cars, nearly 5% more than in
1996, were invoiced in 1997. The medium-size cars Volvo S40 and V40 were
well received in Europe and were also introduced in Japan, South Africa and a
number of markets in Southeast Asia. The new turbo version of the Volvo S40
and V40 had a major impact on the market during the second half of the year.
The Volvo S70 and V70, which replace the Volvo 850, helped to strengthen
Cars´ sales in the North American market.
Volvo’s sales and market shares both increased in many countries in Europe.
Sales of new cars in Sweden rose following the end of the uncertainty about the
taxation of company cars. The number of Volvo passenger cars registered in-
creased 18%, to 51,400 (43,700), while the Group’s share of the market de-
clined slightly. Volvo models captured the three top spots in the ranking of car
sales in Sweden. The Volvo S70 and V70 ranked first, ahead of the Volvo 940,
S90 and V90 in second place. Following a rise in the last quarter of the year, the
Volvo S40 and V40 ended up in third place. The number of registrations in
Great Britain increased by 21%, to 40,700 (33,700) and Volvo’s share of a growing
market was higher. The Volvo S40 and V40 accounted for half of the registrations.
The rise in Italy was also fully attributable to the Volvo S40 and V40.
For the first time since the end of the 1980s Volvo sold more than 100,000
cars in North America. The Group’s market shares rose in both the U.S. and
Canada. The four-wheel-drive Volvo V70 AWD and V70 XC estate wagons that
SEK million 1995 1996 1997
Net sales 83,340 83,589 96,453
Operating income 1,089 1,498 4,510
Operating margin, % 1.3 1.8 4.7
Num ber of cars invoiced
Number 1995 1996 1997
Western Europe 219,340 219,980 234,050
Eastern Europe 5,820 4,910 5,910
North America 99,230 95,660 101,980
South America 2,840 950 2,280
Asia 42,130 40,280 36,170
Other 5,280 6,470 6,050
Total 374,640 368,250 386,440
Cars’ largest m arkets
Volvo car Market share,
registrations %
1996 1997 1996 1997
USA187,600 90,000 1.0 1.1
Sweden 43,700 51,400 23.8 22.8
Great Britain 33,700 40,700 1.7 1.9
Germany 31,700 36,900 0.9 1.0
Italy 21,900 25,300 1.2 1.0
Japan 24,000 19,900 0.7 0.6
Market trend cars
Registrations of new passenger cars,
millions of units
97
96959493
5
10
15
20
25
40
35
30
Western Europe
Nafta
Japan
Other Countries
36.4 37.5
12.8
9.4
9.4
4.5
4.7
7.2
6.5
3.1
3.0
Asia
13.3
Total
The total market for cars
rose in 1997 to 37.5 m illi-
on cars (36.4). The m ar-
kets in USA and Canada
decreased 2%, while the
European m arket rose 5%.
The predicted growth m ar-
kets in Southeast Asia
were hit by a financial
recession and car sales
declined in the latter part
of the year, notably in
Thailand, Taiwan and
Malaysia.
1 Signed orders.
A complete 11-year summary is shown on pages
76–87.