Volvo 2008 Annual Report Download - page 57

Earnings
Net sales of the truck operations in 2008 rose
8% to SEK 203,235 M (187,892). Operating
income amounted to SEK 12,167 M (15,193),
while the operating margin was 6.0% (8.1).
The lower operating earnings is an effect of
higher prices for raw materials and com-
ponents, particularly in the fi rst half of the year,
increased costs for research and development
in response to new emission legislation and
signifi cant under absorption of costs following
the rapid deceleration of the production pace
toward year-end. In addition, earnings were
affected adversely by about SEK 450 M in
costs related to personnel downsizing during
the latter part of the year and by impairment
losses on the value of used trucks in inventory
and increased provisions for residual value
commitment.
Joint-venture with Eicher Motors in India
During the year, AB Volvo and Eicher Motors
formed the joint-venture company VE Com-
mercial Vehicles (VECV). As of August 1,
2008, 50% of the joint-venture company is
consolidated in the Volvo Group. VECV com-
prises the entire Eicher Motors truck and bus
operations, while concurrently the Volvo Group
is contributing its Indian sales operations in
the truck segment and the service operations
for trucks and buses.
Established in 1984, Eicher Motors devel-
ops and sells a broad product range compris-
ing light, medium-heavy and heavy trucks and
buses as well as truck chassis, engines and
engine components. With a market share of
nearly 30% in the medium-heavy (5-12 tons)
truck segment, Eicher is India’s third largest
manufacturer of commercial vehicles. Eicher’s
production facilities are in Pithampur in central
India and it has a dealer network nationwide in
India as well as in other markets. The Indian
market weakened signifi cantly during the year
and is expected to decline also in 2009. During
August 1 and December 31, 2008 deliveries
of 2,744 trucks are consolidated in the Volvo
Group. VECV continues to invest in new prod-
ucts, higher quality and expansion to new
markets.
Volvo Trucks
– a record year in a declining
market
2008 was one of Volvo Trucks most success-
ful year so far, with very high customer satis-
faction, a strong position in the market and a
new competitive product range.
However, the global downturn led to a rapid
decline in orders during the second half of the
year.
Retail a core business
Volvo Trucks’ new retail strategy has further
improved customer understanding. Volvo
Trucks has further developed the service busi-
ness with a broader customer offering and
with improved complete solutions adapted to
customer requirements. Focus is on support-
ing customer productivity and profi tability by
providing service, lease and maintenance con-
tracts. The parts and aftermarket business
contributes to improving Volvo Trucks fi nancial
performance by being more stable compared
to the sale of new trucks.
VOLVO TRUCKS
Record fi rst six moths of the year.•
Dealt with the downturn in the market. •
Quick adjustment from eliminating
bottle necks to instead reducing pro-
duction, lowering costs and freeing
tied-up capital during the third and
fourth quarter.
Launch of new, competitive product •
range with Volvo FH, Volvo FH16 and
Volvo FM11 with focus on safety, driver
comfort and new drivelines. Field tests
with hybrid refuse trucks.
Plans for restructuring the North •
American business.
Volvo do Brasil named best employer •
in Brazil.
Handle the downturn so that the market •
position is strengthened and fl exibility
increased.
Roll out the new generation of products •
(Volvo FH, Volvo FH16 and Volvo
FM11). Launch of Volvo FH16 700.
Continue to develop sales of services •
supporting the truck according to the
customer segmentation strategy.
Increase effi ciency in North American •
operations.
Continued focus on selling and admin-•
istration costs and on cash fl ow.
Gradual start-up of production in the •
new factory in Kaluga, Russia.
Continued expansion of delivery cap-•
acity to meet the strong demand for
trucks in virtually all markets outside
North America.
Manage infl ation and strong cost focus. •
Maintain a high level of preparedness
for economic and demand trends.
Launch new generation of trucks, Volvo •
FH and Volvo FM by summer.
Manage a continued weak demand in •
North America.
Outcome 2008 Ambitions 2009Ambitions 2008
Deliveries by model
Volvo Trucks 2007 2008
Volvo FL, FE, FM 31,570 32,379
Volvo FH, FH16 48,366 53,098
Volvo NH 24 0
Volvo VN, VHD, VT 16,565 15,788
Volvo VM 3,584 4,687
Total 100,109 105,952
Deliveries by market
Volvo Trucks 2007 2008
Western Europe 41,009 41,025
Eastern Europe 18,456 17,162
North America 16,692 15,887
South America 10,166 12,890
Asia 9,002 13,440
Other markets 4,784 5,548
Total 100,109 105,952
In 2008, Volvo Trucks introduced new versions
of the heavy-duty trucks Volvo FH, Volvo FH16
and Volvo FM.
Business areas 2008
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