Volvo 2008 Annual Report Download - page 13

2008 Joint venture within trucks and buses with Eicher Motors in India
2007 Acquisition of Ingersoll Rand’s road construction operations
2007 Acquisition of Chinese wheel loader manufacturer Lingong
2006 Acquisition of Nissan Diesel of Japan, completed in 2007.
2005 Sale of the service company Celero Support
2004 Acquisition of remaining 50% of the Canadian bus manufacturer
Prevost
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
Heavy truck registrations, >16 tons Volvo Group – Acqusitions and Divestments
Europe
North America
Vehicles, thousands
0807060504
319329295277255
185
208349308249
35
43484842
Japan
Total heavy-duty truck market
Thousands
98
255
08
185
98
220
08
319
98
50
08
160
98
39
08
550
98
44
08
133
98
32
08
35
98
42
08
118
Europe Russia China
Japan
India
South America
North America
133
133
133
08
08
08
08
h Am
h Am
eric
eric
a
a
h Am
h Am
erica
+202%
+140%
+220%
+1,310%
Fluctuating raw materials prices
The boom in recent years, with higher production and increased transports has resulted in upward pressure
on raw materials prices. In particular, the price of oil continued to climb during the fi rst half of 2008. At the
beginning of 2008, North Sea oil, so-called Brent, cost USD 100 per barrel, later peaking at about USD 150
in July. In pace with the increasingly weaker trend in the world economy, the price of oil dropped sharply
during the second half of the year. In December, a Brent barrel cost about USD 36. The price of other impor-
tant input goods, such as metals and rubber, retreated during the second half of 2008 after the sharp rises
in recent years.
Fuel represents a large part of the operating costs for many of the Volvo Group’s customers. Fuel accounts for
as much as one third of total costs for a transport company. Accordingly, fuel economy is an important factor when
they choose new vehicles and machinery. This places demands on manufacturers to develop, new, more fuel-
effi cient products. Combined with increasingly stringent environmental demands, this means that substantial
investments must be made in research and development related to new technologies that reduce emissions and
with regard to complementary fuels and alternative drivelines with better environmental performance.
The Volvo Group is well in the forefront in the development of more fuel-effi cient engines and alternative
drivelines, such as hybrids for example.
Strengthened position in important markets
Since long, 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, the Volvo Group has for some time also focused on these ‘new’ markets. Through
the acquisitions of Japanese truck manufacturer Nissan Diesel, Chinese wheel-loader manufac-
turer Lingong, the Ingersoll Rand division for road construction equipment,
and through the formation of a joint-venture for the production of trucks
and buses with India-based Eicher Motors, also now Asia is an home
market for the Volvo Group. At the same time, by strengthening the
dealer and service network, the Volvo Group has positioned itself well in
Eastern Europe.
To meet the challenges and distribute development costs, for instance
for engines, over large volumes, consolidation is occurring among manu-
facturers. Mergers and acquisitions have been common in both North Amer-
ica and Europe. In the past few years attention has increasingly focused on Asia,
where the Volvo Group had a head start with several signifi cant acquisitions.
A global group 2008
9