Volvo 1998 Annual Report Download - page 28

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26
REDOVISNING PER AFFÄRSOMRÅDE
Cars
The passenger car industry in 1998 was characterized by continued severe
competition and there were strong demands on development in marketing as
well as in distribution, product- and process-development.
The total world market of new-car registrations, including mini-cars (<660cc),
decreased to 36.5 million vehicles in 1998. Demand in the European car market
has increased continuously since 1993 and there was a sharp rise, 7%, in the
number of new cars registered in Europe in 1998, compared with 1997. The
North American market declined by approximately 1%. The Japanese market
which is important to Volvo, declined in total by 9%, while the market for
imported makes was down 18%.
Competitors
Volvo Cars is a specialist manufacturer in the car industry with products in the
upper segment of the market where a strong brand name is required in order to
achieve a competitive position. Mercedes-Benz, BMW and Audi are important
competitors. In the large-car segment, which in 1998 included the Volvo S/V70,
Volvo S/V90, Volvo 940, Volvo C70 and Volvo S80, the share of the market in
Europe was 7.0% (8.2), with a 11.5% (10.9) share in North America. In the
medium-car segment in which the Volvo S/V40 competes, the share in Europe
was 4.3% (3.6). Volvo’s share of the passenger car market as a whole was
unchanged at 1%.
Consolidation in the car industry meant alliances across national borders and
cultures. The consolidation process also continued in the supplier and after-sales
industries, with major mergers. Another trend that was accentuated is that
responsibility for a greater portion of the car’s content is being outsourced
to suppliers resulting in shared research and development costs.
Objectives in 1999
Volvo Cars’ product line will be broadened in 1999 through introductions of
Volvo S/V40 models in new markets, as well as new versions of the Volvo S80,
whose engine program is being expanded to include 5-cylinder gasoline and
diesel engines.
Engine development is being focused on engines with lower fuel consumption.
In addition, development work on a Volvo diesel engine is being intensified to
meet the increasing demand for diesel-powered cars.
Introduction of Volvo S80, based on a new industrial platform
The Volvo S80, introduced in May 1998, is broadening Cars’ customer base by
attracting new categories of customers and also confirms Volvo’s position in
terms of safety, quality and concern for the environment. The Volvo S80 is the
first model developed on Cars’ new, large platform. By basing an increasing
number of models on the same platform, the company is achieving shorter lead
times, more efficient production and increased cost-effectiveness. The method
makes a broader range of products possible.
Increased supplier responsibility for development and production of complete
systems in cars is an important part of Volvo’s concept. Nearly 60% of the value
98
97969594
Total market development cars
Number of new cars, registered, million
5
10
15
20
25
40
35
30
Western Europe
NAFTA
Japan
Other
37.5 36.5
13.3
9.3
9.4
4.1
4.5
6.7
7.2
2.1
3.1
Asia
14.3
Total
FINANCIAL REVIEW BY BUSINESS AREA