Volvo 2007 Annual Report Download - page 15
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Please find page 15 of the 2007 Volvo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Heavy trucks registrations, >16 tons Volvo Group - Acqusitions and Divestments Volvo Group net sales by market, 2007
0706050403
329295277255229
208
349308249178
Europe
North
America
Vehicles,
thousands
Rising oil prices a challenge
Increased production and more transport have created upward pressure on the prices of raw
materials. In particular, the price of oil has risen sharply. Various supply disturbances and political
unrest, as well as inadequate refi nery capacity, have fueled the oil price trend. In 2007, the price
of oil rose steadily. At the beginning of the year, North Sea oil – that is, Brent – cost slightly more
than USD 50 a barrel. By year-end, it cost more than USD 100. The prices of other key raw materi-
als, such as metals and rubber, have also risen in the past few years.
There is a great deal of uncertainty surrounding the oil price trend. A large part of the extraction
of crude oil occurs in politically unstable countries, causing sensitivity to a variety of disturbances.
Fuel represents a large portion of the operating costs of many Volvo Group customers. While
they may have been diligent in fi nding ways to offset rising costs, fuel effi ciency is a key factor
when they choose new vehicles or equipment. This imposes a requirement on manufactures to
develop new, more fuel-effi cient engines. Combined with the increasingly stringent environmen-
tal requirements, this means that considerable investment must be undertaken in research and
development relating to new technologies that reduce emissions and to supplementary fuels and
alternative drivelines with better environmental performance characteristics.
Strengthened position in growth markets
The Volvo Group has an established, strong position in Western Europe and North America. Since
the fastest growth is occurring outside these regions (in markets in which as recently as 10 years
ago the Group had limited operations), it is the Volvo Group’s intention to focus on these ‘new’
markets. The Volvo Group has advanced is positions in Asia, through its acquisitions of Japanese
truck manufacturer Nissan Diesel, Chinese wheel-loader manufacturer Lingong and the Ingersoll
Rand division for road construction equipment, and through its planned formation of a joint-venture
company for the production of trucks and buses with the India-based Eicher Motors. At the same
time, by strengthening its dealer and service network, the Volvo Group has positioned itself to take
advantage of the strong growth in Eastern Europe.
To meet the challenges and distribute development costs over large volumes, consolidation is
occurring among manufacturers. Mergers and acquisitions have been common in both North
America and Europe, and in the past few years attention has increasingly focused on Asia, where
the Volvo Group has been especially active, completing several signifi cant acquisitions.
2007 Letter of intent on joint venture with the truck and bus operations of Eicher
2007 Acquisition of Ingersoll Rand’s road construction operations
2007 Acquisition of Lingong
2006 Acquisition of Nissan Diesel, completed in 2007.
2005 Sale of the service company Celero Support
2004 Acquisition of remaining 50% of the Canadian bus manufacturer Prévost
2004 Sale of axle-manufacturing operations to ArvinMeritor
2003 Acquisition of the truck and construction equipment operations of Bilia
2001 Sale of the insurance operations in Volvia to If
2001 Acquisition of the truck manufacturers Mack and Renault VI
1999 Sale of Volvo Cars to Ford
1998 Acquisition of the excavator operations of Samsung Heavy Industries
North
America
18%
Europe
55%
Asia
15%
A global group 2007 11