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26 Board of Directors’ Report
Total market
The total world market for heavy and
compact construction equipment, within
Volvo CE’s product range, increased by
20% during 2004. In North America the
market increased by 27%, Western
Europe was up 12%, while other markets
were up 20%, primarily driven by strong
development in Eastern Europe, up 46%.
South America rose 54% and East Asia
was up 55%.
The increase in the total market was
driven by both heavy and compact con-
struction equipment. The North American
market for heavy equipment was up
41% and the market in Europe was up
12%. Other markets rose by 14%.
The world market for compact equip-
ment increased in 2004, up 20% com-
pared with the preceding year. The mar-
ket in North America was up 21%, and
markets in Europe were up 12%. Other
markets rose by 27%.
Business environment
No major structural changes in the indus-
try were reported during 2004. The con-
solidation among small and medium com-
petitors continued. Overall business envir-
onment remained positive in most mar-
kets, with the exception of a significant
slow down in China during the second
half of the year, due to governmental
measures taken to slow the economy.
Volvo CE’s products, spare parts and
services are offered worldwide in more
than 125 markets. Customers are using
the products in a number of different
applications including general construc-
tion, road construction and maintenance,
forestry, demolition, waste handling,
material handling and extraction.
Volvo CE has launched more than 50
new products onto the market over the
last three years. The comprehensive
product portfolio includes a range of
wheeled and crawler excavators, articu-
lated haulers, wheel loaders, motor
graders and a range of compact equip-
ment such as compact wheel loaders,
compact excavators, backhoe loaders and
skid steer loaders.
The customer offering also includes
services such as financing, leasing and
used equipment sales. The rental initia-
tive, launched in 2001, continues to
develop favorably and on December 31,
2004, Volvo CE Rents had 77 stores
established in North America and Europe.
In the course of 2004, almost 90% of
the US distribution network, acquired
from L.B Smith Inc in 2003, was divested.
The different distribution areas have been
sold to strong, well capitalized and ex-
perienced independent dealers.
In Europe, the construction equipment
dealerships arising from the Bilia acquisi-
tion have been fully integrated with Volvo
CE’s organization.
CONSTRUCTION
EQUIPMENT
00 01 03 04
20.0 21.1 21.0
00 01 03
00 01 02 04
02
23.2
02
03 0
Net sales, SEK bn
04
Operating income*, SEK bn
* excluding
restructuring
costs
* excluding
restructuring
costs
1.6 0.9 0.4 0.9
8.0 4.2 1.9 3.9
Operating margin*, %
Net sales as percentage of
Volvo Group sales, %
28.7
1.6
5.5
14%