Volvo 1998 Annual Report Download - page 29

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of materials in the Volvo S80 is delivered to the factory in sequences in ac-
cordance with the just-in-time principle. Eight large suppliers have, in close
cooperation with Volvo Cars, established production close to the Torslanda
plant, making it possible to deliver sequences of finished modules to the plant.
Production and capacity
In all, 398,500 (387,400) Volvo cars were produced. The production of the
Volvo 940 and Volvo S/V90 in the Torslanda plant, Sweden, was terminated in
February 1998. The plant was then retooled prior to the start-up of production
of the Volvo S80, which resulted in low utilization of capacity in the plant in
1998 as a whole. Large-scale production of the Volvo S80 was begun in August
and cars were being manufactured at an annual rate of 75,000 units after eight
weeks. In the first quarter of 1999 production of the Volvo S70 is planned to be
moved from the Torslanda plant to Ghent, Belgium, further increasing the effici-
ency of the Torslanda plant in applying the new concept that is being utilized
initially in production of the Volvo S80. Utilization of capacity was high during
the year in Ghent, Belgium and in the factory in Born, the Netherlands, which is
owned jointly with Mitsubishi.
The production facilities in Malaysia and Thailand were used to a minimal
degree and the plant in Indonesia was closed during the year. The plant in
Halifax, Canada was closed in December as part of the Group’s review of its
industrial structure. The plant produced approximately 8,000 cars a year.
At the end of 1998 the Autonova plant in Uddevalla, which is owned jointly
by Volvo Cars and TWR, a British company, increased its production of the
Volvo C70 to an annual rate of 13,000 cars.
An agreement was reached in December 1998 covering transfer during the
first quarter of 1999 of the Dutch government’s holding of a third of the shares
of NedCar equally to Volvo Car Corporation and the Mitsubishi Group.
Capital expenditures
Capital expenditures, SEK 5,625 M (5,544) for property, plant and equipment,
were nearly unchanged, compared to 1997. It pertained to investments in the
product development process and investments in the new, large platform, for
example conversions in the production process in Torslanda and Ghent, invest-
ments in the Olofström body plant and in tools in suppliers’ plants. Significant
investments were also made in the engine production in Skövde as a result of
Cars’ new engine concept for the Volvo S80.
Construction of Volvo Safety Center 2000, a new, advanced safety center was
begun in 1998.
SEK M 1996 1997 1998
Net sales 83,589 96,453 103,798
Operating income11,498 4,510 3,808
Operating margin, %11.8 4.7 3.7
1 Excluding items affecting comparability during
1998. Including items affecting comparability of
SEK 681 M, operating income amounted to SEK
3,127 M and operating margin to 3.0%.
1996 1997 1998
Western Europe 219,980 234,050 249,560
Eastern Europe 4,910 5,910 5,980
North America 95,660 101,980 110,700
South America 950 2,280 1,860
Asia 40,280 36,170 24,970
Other countries 6,470 6,050 6,610
Total 368,250 386,440 399,680
Volvo car Market share,
registrations %
1997 1998 1997 1998
United States190,000 100,200 1.1 1.2
Sweden 51,400 53,600 22.8 21.1
Germany 36,900 42,400 1.0 1.1
Great Britain 40,700 37,700 1.9 1.7
Italy 25,300 24,200 1.0 1.0
The Netherlands 19,200 19,400 4.0 3.6
1 Signed orders.
Number of vehicles invoiced Cars
Key ratios Cars
Largest markets Cars
Number of cars produced 1994 1995 1996 1997 1998
Volvo S/V 40192,100 79,600 101,700 115,100 151,000
Volvo S/V/C 702166,500 189,100 201,750 202,800 206,900
Volvo S80393,100 101,800 72,350 69,500 40,600
Total 351,700 370,500 375,800 387,400 398,500
1 Includes Volvo 400 series, 1994-1996
2 Includes Volvo 800 series, 1994-1996
3 Includes Volvo 900 series and S/V90 1994-1998. Production of Volvo S80 began in August 1998