Volvo 2012 Annual Report Download - page 62

BOARD OF DIRECTORS’ REPORT 2012 GROUP PERFORMANCE
TRUCKS
Weaker markets
and lower earnings
emand in Europe slowed down
gradually during the year while the
development in North America
was characterized by a strong first
half and a weaker second half of the year. In
Brazil demand recovered towards the end of the
year. The Japanese market weakened during the
second half of the year after governmental incen-
tives to buy new, environmentall adapted trucks
had run out in July.
Weakness in many markets
In 2012, the heavy-duty truck market in Europe
28 (EU minus Bulgaria plus Norway and Switzer-
land) reached 221,000 trucks, down by 9%
compared with 2011. Given the macro-economic
development it is difficult to assess the total
market for heavy-duty trucks in Europe 29 for
2013. The current estimate is that the market will
reach a level of about 230,000 heavy-duty trucks.
In 2012, the total North American retail market
for heavy-duty trucks increased by 15% to
249,562 vehicles, compared with 216,080 in
2011. For 2013 the total market is difficult to
assess, but it is expected to be at about the
2012 level of 250,000 heavy-duty trucks.
In 2012, the Brazilian market decreased by
22% to 87,430 trucks compared with 111,471
trucks in 2011. The total Brazilian market for
heavy-duty trucks is expected to increase and
reach a level of about 105,000 trucks in 2013.
In Japan the total market for heavy-duty
trucks in 2012 rose by 28% to 31,800 vehicles
(24,800). For 2013, the total Japanese market
for heavy-duty trucks is expected to increase to
about 35,000 trucks.
In India, the total 2012 market for heavy-duty
trucks declined by 18% to 195,140 trucks
(237,329).
In general the Volvo Group maintained its mar-
ket positions, with the exception of Japan. In
Europe the combined market share for heavy-duty
trucks amounted to 25.7% (26.3) and in North
America the combined market share was 18.3%
(18.2). In Brazil market share increased to 18.2%
(17.1) while it decreased to 17.5% (20.1) in Japan.
In India the market share for Eicher amounted to
31.4% (30.5) in the medium-duty segment and to
3.9% (3.1) in the heavy-duty segment.
Lower earnings
In 2012, net sales in the truck operations
decreased by 3% to SEK 192,283 M (198,920)
after a weak second half of the year. Operating
income decreased to SEK 10,216 M (18,227),
while the operating margin was 5.3% (9.2).
The lower operating income was a result of
lower sales and low capacity utilization during
the second half of the year as well as restructur-
ing costs. Profitability was also affected by the
high investment pace in research and develop-
ment for the upcoming comprehensive product
renewal and related launch costs in sales, pro-
duction and aftermarket support. Among the
projects are the new Volvo FH series, a new
Renault Trucks range, a new range of trucks in
the lower price segments in emerging markets,
a new medium-duty engine range and research
and development ahead of the new emission
legislation Euro 6.
New products
On July 5, Volvo Trucks presented an engine tai-
lored for the Euro 6 environmental standards.
Nitrogen oxide emissions will drop by 77%
and particulate emissions will be halved from
already low levels. First off the mark is
Volvo’s D13 460 hp engine, which powers more
than one-third of all Volvo trucks.
A completely new generation of Volvo FH was
presented to the public in early September
through parallel launches in some of the most
important markets in Europe. It was also dis-
played at the automotive fair in Hannover where
it received very positive reviews. The advanced
technology of the new Volvo FH will create a
new platform for strengthening Volvo Trucks’
competitiveness. Production will start in the spring
of 2013.
In December it was announced that the full
lineup of Volvo Group truck models in the US
had been certified according to the 2014 green-
house gas regulations.
New truck strategy and reorganization
in EMEA
The new truck strategy, which is an important
part of the goal to improve the operating margin
by 3 percentage points, is described in detail
starting on page 12.
On January 1, 2013, the Volvo Group intro-
duced a new organization for its truck dealer
networks in Europe, the Middle East and Africa
(EMEA). Implementation will be carried out dur-
ing the year. The reorganization aims to capital-
ize more effectively on opportunities for the
Group’s brands and products in line with the
new strategy for the truck operation.
The truck operation’s product offer
stretches from heavy-duty trucks for
long-haulage and construction work
to light-duty trucks for distribution.
Number of
employees
61,300
Position on world market
The Volvo Group is one of the world’s
largest manufacturers of heavy-duty
trucks.
Brands
Eicher, Mack, Renault Trucks, UD
Trucks and Volvo.
D
Share of Group
net sales
63% (64)
During 2012 market
conditions varied between
different parts of the
world. In Europe, South
America and Asia truck
markets weakened while
North America showed
growth.
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