Volvo 1997 Annual Report Download - page 29

27
During the year Volvo Trucks introduced the Volvo FL6 Hybrid, a combination
of a conventional truck and an electrical vehicle, which is currently being tested
in commercial operations.
Substantial investments in the industrial system
and establishment of operations in growth markets
Trucks’ investments in property, plant and equipment in 1997 amounted to SEK
2,439 M (2,589). Continuing large investments in the industrial system included
an increase in production capacity for the D12 engine in Skövde, and for gear-
boxes and rear axles in Köping and Lindesberg, as well as the construction of a
cab plant in Curitiba, Brazil.
The establishment of an assembly plant was completed in Pakistan and con-
struction of a similar plant was begun in India. An assembly plant for Volvo
trucks was established in Tunisia in cooperation with local interests.
Investments were also made in the assembly plant and development laboratories
in Göteborg. As in the preceding year, investments were made in the distribution
network in Europe in the form of new dealers and service stations in Eastern
Europe and the rationalization of the existing dealer network, among other
measures.
Cooperation in China
In January 1998 the Chinese Government approved the project description that
China’s largest truck manufacturer, China National Heavy Truck Corporation,
had prepared with respect to establishing a joint-venture company with Volvo
Trucks.
The joint-venture company will develop, produce and distribute heavy trucks.
The industrial structure will be adapted for a capacity of 20,000 units.
Buses
The bus industry was characterized by continuing strong competition in 1997.
The total Western European market for buses with a total weight exceeding
12 tons continued to decline, compared with the preceding year. Demands for
environmentally compatible and technically efficient systems for urban bus traffic
continued to increase.
Despite the severe competition, Volvo’s bus operations were successful in
1997, with a sharp increase in volume of business outside Europe that strength-
ened Volvo Buses position in the world market. Operations posted sales of
SEK 10,582 M (8,527), corresponding to an increase of 24%.
There was a significant change in the scope of operations. The portion of com-
plete buses manufactured and delivered increased strikingly. Strategic acquisitions
during the year will further strengthen this trend in the future.
Strategic acquisitions
Carrus Oy in Finland, the largest manufacturer of bus bodies in the Nordic
region is a wholly owned subsidiary of Volvo Bus Corporation as of January
1998. At year-end 1997 an agreement to acquire Nova BUS, the largest producer
of city buses in the United States and Canada was concluded. Nova BUS and
In October 1997, Trucks
inaugurated its new cab
plant in Curitiba, Brazil.
The investment amounts
to SEK 350 M and the
plant will produce cabs
based on the FH techno-
logy. The first locally pro-
duced Volvo FH12 was
assembled in Curitiba,
in March 1998.
SEK million 1995 1996 1997
Net sales 7,695 8,527 10,582
Operating income 405 331 550
Operating margin, % 5.3 3.9 5.2
Num ber of buses invoiced
Number 1995 1996 1997
Western Europe 3,510 3,770 4,030
Eastern Europe 60 70 160
North America 340 750 1,110
South America 1,510 1,460 1,350
Asia 920 1,060 1,410
Other 490 300 670
Total 6,830 7,410 8,730
Buses’ largest m arkets
Registrations of Market share,
Volvo buses %
1996 1997 1996 1997
Great Britain 1,500 1,450 63.8 62.7
Brazil11,170 920 8.5 7.5
USA 540 650 n.a. n.a.
Sweden 420 550 48.7 58.4
Hong Kong1380 540 n.a. n.a.
1 Delivery from factory.
A complete 11-year summary is shown on pages 76– 87.