Volvo 2007 Annual Report Download - page 74
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Please find page 74 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.Financial Services
– expansion into new markets
Financial solutions are vital to the Volvo Group. They increase customer
satisfaction, competitive advantage, profi tability and growth. Financial
Services offers traditional fi nancial services and dealer fi nancing.
In many markets, insurance, rental services and other offerings are
also available.
In 2007, Volvo Financial Services (VFS) enjoyed
great success in its slightly more than 50 mar-
kets, where it functions as the leading supplier
of fi nancial solutions to the Group’s customers
and dealers. The company has achieved this
success through its dedicated business teams
who know the Group’s products better than any
other bank or fi nance company. Their goals are
to integrate VFS’s activities more closely with
the sales processes of the business areas,
enhance the depth and breadth of the product
offering and develop the supply of services to
key accounts. As a result of this, VFS achieved
higher levels of profi tability, penetration and
assets, while keeping credit losses and write-
offs to historically low levels during the year.
Thanks to strong demand in 2007, several
milestones were achieved and changes imple-
mented, including the approval to establish
customer fi nance companies in Chile, Hun-
gary and Slovakia.
VFS launched new fi nance programs for
the Group’s latest two acquisitions, Lingong
and Ingersoll Rand’s Road Development divi-
sion, at the same time that discussions were
held with Nissan Diesel to investigate new
fi nancing opportunities in Japan and other
parts of Asia.
In Europe, VFS reorganized its market
approach in order to increase customer satis-
faction and deliver stronger support to the
individual Business Areas and brands sup-
ported by VFS. In the mature markets, Finan-
cial Services reduced its equity ratio to 8%,
thereby freeing up capital for the Group.
An extensive range of services
Financial Services makes signifi cant contri-
butions by providing traditional fi nancial ser-
vices such as installment contracts, opera-
tional and fi nancial leasing and dealer
fi nancing. In many markets, insurance is avail-
able as well as other revenue-generating
offers, including rental services, factoring,
maintenance and repair contracts, syndica-
tion services and other services. All of these
activities are designed to create lasting value
for the shareholders over a business cycle.
Strong results
Total new financing volume in 2007 amounted
to SEK 41.4 billion (35.3). VFS’ strategy for
profitable growth focused on three main
objectives: organic growth, geographical
expansion and growth through the acquisi-
tions of the Volvo Group. As a result of closer
cooperation with other Business Areas, pene-
tration rates grew to 24% compared with 20%
in 2006. In total, 46,686 new Volvo vehicles
and equipment (41,732) were financed during
the year.
The acquisitions of the Volvo Group pro-
vided VFS with growth opportunities in several
markets. During 2007, VFS began offering
financing to road development customers in
the newly acquired operations from Ingersoll
1 Years 2004–2007 are reported in accordance with IFRS and 2003 in accordance with prevailing Swedish GAAP. See Note 1 and 3.
2 Share of business fi nanced by Financial Services in markets where fi nancial services are offered.
3 Years 2006-2007 are reported according to a new reporting structure, in which Volvo Group Real Estate and Volvo Treasury are not included in VFS. See Note 7.
Credit portfolio, net1, SEK bn Operating income1,3, SEK M Penetration by
business area2, %
Return on shareholders’
equity1,3, %
0706050403
1,6491,6862,0331,365926
Volvo
CE
Volvo
Trucks
Renault
Trucks
Buses Mack
Trucks
30 34 24 29 15 16 12 13 10 18
07
06
0706050403
91.176.778.864.360.1
Market penetration2, %
0706050403
24.119.721.722.423.6
0706050403
15.913.215.311.19.8
Volvo Financial Services offers both wholesale and
retail fi nancing and is a strong contributor to estab-
lishing close links with customers.
70 Business areas 2007