Volvo 2015 Annual Report Download - page 4

A GLOBAL GROUP CEO COMMENT
Improved
profitability
and cash flow
How would you summarize 2015 in terms of market
development?
Jan Gurander (JG): If we start in North America, the market was
incredibly strong and we have a very solid business. Around 90%
of the Volvo trucks are now delivered with our own engines and for
gearboxes that figure is 85%. Naturally, this development is very
positive for our dealer network in terms of share of business with
the customer during the entire life cycle. The North American
market is slowing down, but in a controlled way, and we believe
that 2016 will be a good year as well, albeit not as good as last
year.
And what about Latin America?
JG: For Brazil, which is by far our biggest market in Latin America,
it was a different story. Compared to the peak years, the drop in
demand has been dramatic. We are keeping our market shares and
have adjusted production and our organization to this much lower
level – which we believe will be with us for the rest of 2016, at least.
Turning to Europe, it seems that we are seeing a positive
trend when it comes to Renault Trucks?
JG: Yes, our new range is very well received by the customers and
has also to some extent opened the door to new segments. Over-
all, demand in Europe has been gaining momentum, slowly but
steadily. Some of the factors behind this development are low
interest rates, low fuel prices and a need to invest in new trucks,
as the fleet in Europe is rather old.
And if we look to the East?
JG: The market in Japan in 2015 was basically flat and rather
undramatic. For the rest of Asia, the picture was rather mixed.
India was the only emerging market where we had growth. As for
China, the total market was down 25% in 2015. Our strategic
partner Dongfeng Commercial Vehicles (DFCV) is making adjust-
ments to manage this lower volume.
How is the cooperation between the Volvo Group and
DFCV developing?
JG: Very well. In June we signed a license agreement granting DFCV
the right to develop an 11-liter engine based on the Volvo Group
engine currently used in the UD Trucks models Quester and KuTeng.
Speaking of China: how is Construction Equipment
coping with the downturn?
JG: The market for construction equipment in China today is
about one fourth of what it was when the market peaked. Last
year we continued to adapt our organization to manage the lower
volumes in China. A lot of work has also been put into managing
credit risks linked to dealers and customers in China. On the
global level we focused more on our bigger machines where the
margins are better. We have done quite well in these segments
and increased our market shares. Overall, a tremendous job done
by Volvo Construction Equipment. In fact, all our Business Areas
performed well in 2015. Volvo Financial Services had a record
year, with a result breaking the SEK 2 billion ceiling, and Volvo
Penta also had reason to celebrate since their result exceeded
SEK 1 billion. It is really good to see that our colleagues at Volvo
Penta continue to turn innovation into sales and profitability. One
example is the new Forward Drive propulsion system that pulls the
boat through the water rather than pushing it, which is great if you
are into wakeboarding or wakesurfing.
And Volvo Buses?
JG: Buses are looking good. We are seeing a gradual improve-
ment in profitability, as an effect of a large number of activities
carried out over the years. In addition to the financial result, Volvo
Buses also had a milestone year when Gothenburg’s first route for
electric buses was opened in June. The electric bus is now ready
for serial production. It is quiet, does not have any exhaust emis-
sions, and is about 80% more energy efficient than a conven-
tional diesel bus.
“ We are now gradually moving
away from major restructuring
programs to more continuous
improvement work”.
Martin Lundstedt
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