Volvo 2013 Annual Report Download - page 67

Restructuring in Japan. In Japan, the
total market for heavy-duty trucks in 2013
rose by 6% to 33,800 vehicles (32,000) as an
effect of government incentives to stimulate the
economy, signifi cant invest ments in public con-
struction projects and a weaker currency that
increased the competitiveness of the ex port indus-
try. UD Trucks’ market share in the heavy-duty seg-
ment incresed to 18.7% (17.5).
The Japanese market is one of the Group’s larg-
est, due, amongst others, to high sales of service
and spare parts. At the same time, the Japanese
market has declined sharply since the peak years of
the early 1990s and the Group is carrying out a
number of activities to strengthen the performance
in the country. Measures are being taken to lower
costs and enhance effi ciency in the sales channels
within the framework of the REX, Retail Excellence,
program which in cludes reducing the number of
employees in sup port functions while increasing
the number of employees who generate income.
A program was announced at the start of 2013
aimed at improving the overall effi ciency of the Jap-
anese production system. The program involves
consolidating manufacturing to the main plant in
Ageo and reducing production capacity in both
engines and truck assembly.
Deal with DFCV in China approved
In January 2013, AB Volvo signed an agreement
with the Chinese vehicle manufacturer Dongfeng
Motor Group Company Limited (DFG) to acquire
45% of a new subsidiary of DFG, Dongfeng Com -
mercial Vehicles (DFCV), which will include the
major part of DFG’s medium and heavy-duty com -
mercial vehicles business. The transaction was
approved by the Chinese National Development and
Reform Commission (NDRC) in January 2014 but
completion is subject to certain conditions, includ-
ing the approvals from other Chinese authorities.
The deal is expected to be fi nalized in mid 2014.
During 2013, the Chinese market for heavy-
duty trucks totaled approximately 774,100 vehi-
cles, while the corresponding fi gure for the medi-
um-duty market was 286,800 vehicles. DFCV
occupies a strong position in both the heavy-duty
and medium-duty segments, with deliveries of
120,631 heavy-duty trucks and 50,995 medi-
um-duty trucks, corresponding to market shares of
15.6% and 17.8%, respectively.
Eicher Pro Series – a strategic milestone for
VECV
In 2013, the total market for commercial vehicles
over 5 tons in India declined by 25% to 297,100
trucks (394,700). The Volvo Group’s joint venture
with Eicher Motors, VE Commercial Vehicles
(VECV), signifi cantly outperformed the market.
VECV’s deliveries of Eicher vehicles decreased by
16% to 40,550 units (48,262) and the domestic
market share subsequently increased to 13.8%
(12.7), the highest to date. In buses, Eicher’s share
rose to 13.5% (12.0), while it remained overall sta-
ble in the medium- duty and heavy-duty segments
at 30.4% (31.4) and 4.4% (3.9) respectively.
VECV has made extensive investments in re cent
years, which have been fi nanced by the compa-
ny’s own cash fl ow. They include a new factory for
medium-duty engines that delivers to the entire
Volvo Group, a new paint shop, new cab line, tool-
ing for new products, new gear plant and a new
facility for bus body building. Investments were
also made in research and development related to
new products. The re sults of these investments
were seen in Decem ber with VECV’s launch of the
Eicher Pro Series, developed specifi cally for India
and other se lected emerging markets. The Eicher
Pro Series covers the entire 5 to 49 ton gross vehi-
cle weight (GVW) range. A stepwise rollout of the
Eicher Pro Series began in February 2014.
Volvo CE advances positions in China
The vast majority of net sales in China stem from
the sale of construction equipment. The Chinese
construction equipment market recovered in the
autumn of 2013 after a period of weak develop-
ment. The market increased by 3% (de cline: 37).
For Asia excluding China, the market increased by
2% (11).
With a volume totaling 256,200 wheel loaders
and excavators in 2013, the Chinese market is by
far the world’s largest market, and the Volvo Group
remains number one in these segments. During
2013, Volvo CE with the brands Volvo and SDLG
had a combined market share of 14.6% (15.0) in
wheel loaders and excavators.
In December, Volvo CE signed an agreement to
acquire the hauler business from Terex, a transac-
tion that is expected to be completed in the sec-
ond quarter of 2014. In addition to strengthening
Volvo CE’s penetration in the core earthmoving
segment, the acquired business will extend the
company’s presence in light mining. The deal also
includes a 25.2% holding in Inner Mongolia North
Hauler Joint Stock Co (NHL), which manufactures
and sells rigid haulers under the Terex brand in
China with a leading position in the market.
Strong positions for Volvo Buses
Volvo Buses has a strong position in India and is one
of the most well-known brands in the market. 5,000
buses from Volvo are in operation in India. In 2013,
preparation for the introduction of a value brand on
the Indian market was initiated.
During the year, Volvo Buses delivered its fi rst
low-fl oor city buses to Shanghai. China is a large
market for electric buses. Sunwin Bus, a Volvo
Buses and SAIC Motor joint-venture, de livered 311
fully electric buses on the Chinese market in 2013.
UD Quester for emerging markets
On August 26, UD Trucks launched Quester, a new
heavy-duty truck range developed specifi cally for
emerging markets. With Quester, the Volvo Group
will address a completely new customer segment
and the trucks are an integrated part of the Volvo
Group’s strategy to increase sales in emerging
markets across Asia Pacifi c and other regions.
Read more about UD Quester on the next page.
Volvo Group in Asia
• Net sales: SEK 53,512 M (65,458)
• Share of net sales: 20% (22)
• Number of employees: 17,953
(17,642)
• Share of Group employees: 19% (18)
• Largest markets: China, Japan,
South Korea and Turkey.
Market development, heavy-duty
trucks, Japan, Thousands
Market shares, heavy-duty trucks,
Japan, %
Market development, construction
equipment, China, Thousands
The Eicher brand has continuously
strengthened its position as an innova-
tive force on the Indian truck market.
The launch of the Pro Series adds to
the reputation.
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