Volvo 2012 Annual Report Download - page 52

A GLOBAL GROUP 2012 GROUP PERFORMANCE
Weakening markets
Asia accounted for 23% (24) of net sales during
2012. In 2000 the figure was 7%. The sharp
increase has primarily been achieved by the
acquisitions of UD Trucks of Japan (named Nis-
san Diesel at the time of the acquisition), the
majority in Lingong of China and through the joint
venture VECV in India, but also through organic
growth. In the beginning of 2013, the Volvo Group
signed an agreement to purchase 45% of the
Chinese truck manufacturer Dongfeng Commer-
cial Vehicles, which will give a strong presence on
the Chinese truck market – the world’s largest.
In Japan the total market for heavy-duty trucks
in 2012 rose by 28% to 31,800 vehicles (24,800)
partly driven by government incentives as well as
the need for trucks for reconstruction work follow-
ing the earthquake and the tsunami. For 2013, the
total Japanese market is expected to increase to
about 35,000 heavy-duty trucks on the back of
expectations of higher economic activity stem-
ming from governmental stimulus activities and a
weaker currency.
In India, the total 2012 market for heavy-duty
trucks declined by 18% to 195,140 trucks (237,300).
In China the largest part of net sales stem from
construction equipment. The Chinese construc-
tion equipment market continued to weaken in
2012 and declined by 37% (+7%). In Asia outside
of China, the market for construction equipment
grew by 11% (28). For 2013 the total market
growth in China is expected to be in the range of
minus 5% to plus 5%. Asia excluding China is
expected to decline by 0% to 10%.
Volvo CE number 1 in China
With a volume totaling 248,000 wheel loaders and
excavators in 2012, the Chinese market is by far the
world’s largest, and the Volvo Group is the number
1 in these segments. During 2012 Volvo CE with
the brands Volvo and SDLG had a combined mar-
ket share of 15.0% (12.0) within wheel loaders and
excavators. That increased the distance even fur-
ther to the number two on the market.
Part of Volvo CE’s strategy is to develop prod-
ucts for growth markets under the Volvo brand.
In November 2012, the medium-heavy wheel
loader Volvo L105 was launched. It was devel-
oped specifically to meet the needs of customers
in China.
Since 1998, Volvo CE’s main facility for the
development and manufacture of excavators is
situated in Changwon, South Korea.
Sunwin, leading within large electric buses
China is a large market for electric buses. Cur-
rently there are 1,700 large (over 10 meters)
electric buses in China, an increase of 1,000
buses during 2012 alone. Here Sunwin Bus, a
Volvo Buses and SAIC Motor joint-venture, has a
market share of approximately 40%. During the
year, Sunwin Bus delivered 3,250 buses. 512 of
these were so called new energy buses, of which
413 were fully electric. That made Sunwin leading
in China and a world-leading supplier of large,
fully electric buses in 2012.
Plans to launch Value Trucks
In the next few years, the Volvo Group plans to
launch a new series of trucks in the so called
value segment, i.e the lower price segments, in
emerging market in for instance Asia, South
America and Africa. Production is being pre-
pared in Thailand and India. The Group also
intends to manufacture these trucks for the
Chinese market in the joint venture DND.
Restructuring in Japan
In Japan, a voluntary leave program was launched
with the aim of reducing costs by 10% to improve
competitiveness. Compared with mid-2012, the
organization was reduced by 1,000 employees
and consultants as of January 1, 2013.
In the beginning of 2013, a program to
improve the total efficiency in the Japanese pro-
duction system was launched.
Success and investments in India
During the year, VECV (the joint venture together
with Eicher Motors) strengthened its position in
the Indian market. The total market for trucks and
buses above 5 tons decreased by 12% but VECV’s
deliveries remained on the same level as the previ-
ous year and the market share rose to 12.7%
(11.1); the highest so far. Within buses Eicher’s
share rose to 11.9% (9.7), for trucks 5-14 tons to
31.4% (30.5) and in the heavy-duty segment over
16 tons to 3.9% (3.1).
VECV continues to invest in India. During 2012
and the next few years, some SEK 2 billion is
invested in a new factory for medium-duty engines
that will be up and running in 2013, a new paint
shop, tooling for new products and a new facility
for bus chassis. The sum also includes research
and development related to a number of new
products to be launched the next few years. The
investments are made with funds already in VECV
and with the company’s future cashflow.
Furthermore, Volvo India invests approxi-
mately SEK 2.5 billion the next few years, among
other things in a new factory in Bangalore for the
production of the new truck series planned for
the value segment. In addition, investments are
made in the development of new products and in
a new office in Bangalore where backoffice
functions that were previously spread out over
the city are to be gathered.
Volvo Buses strong in India
Volvo Buses has a strong position in India and is
one of the most well-known brands on the market.
In total, 4,500 buses from Volvo are in operation in
India. Volvo’s city buses run in 13 cities and in the
segment for coaches, the company is represented
on all important routes. During the year a number
of new models were launched, among them the
long-distance coach Volvo 9100, which opens up
new market segments and increases the potential
for growth.
Through both acquisitions and organic growth, the Volvo Group has
created a good position from which to develop further in the dynamic
markets in Asia.
DEVELOPMENT BY CONTINENT
Asia growing in importance
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