Volvo Car Group in 2012
New products and developments for future growth
During 2012 - a year of economic recession in global markets and great challenges for the car industry - Volvo Car Group (Volvo Cars) took several strategic steps which will be of high significance to ensure the future success of the company. The company continued to follow the strategy for future growth despite a challenging business environment. New products were introduced in the market, significant investments were made in future vehicle technologies and the company entered strategic partnerships in several areas. Volvo Cars also adapted to the general downturn in the car industry by adjusting its operations in line with customer demand.
CORPORATE UPDATE
Retail Sales: 421,951 cars
Full-year sales for Volvo Cars amounted to 421,951 cars, a deterioration of 6.1 per cent versus 2011. Several markets reported significant improvements, particularly emerging and overseas markets, while the economic situation in mature markets and regions adversely affected consumer demand for new cars. The phase-out of the Volvo C30, S40 and V50 models had a major impact on sales during the year as the new Volvo V40 was launched towards the end of the year and therefore did not reach full effect in affected markets. This factor as well as the economic situation in Europe are the main explanations behind the deterioration in full-year sales.
In Sweden, Volvo remained the largest car brand with almost one fifth of the market. Volvo followed the Swedish market development and sales were down 11.3 per cent to 51,832 cars. In China, Volvo performed well with the S60 and XC60 models while the overall performance deteriorated by 10.9 per cent to 41,989 cars, partly explained by the termination of the S40 model. Another factor affecting Volvo sales in China was the fierce competition among the imported luxury brands.
2012 First half financials
Volvo Cars reported a positive operating profit for the first six months of the year - a result of protecting margins, staying prudent and not fully participating in incentive wars in some markets. The company reported an operating profit (EBIT) of 239 MSEK over the first six months of 2012, down from an EBIT of 1,529 MSEK over the same period in 2011. Revenue over the period increased by 3.9 per cent to 65.3 BSEK compared with the first half of 2011 (62.9 BSEK). Volvo Cars' global retail sales for the first half of 2012 amounted to 221,309 cars, down 4.1 per cent versus the same period in 2011 (230,746). The year-end report will be published early May 2013.
New President and CEO
On October 19th, the Board of Directors appointed Håkan Samuelsson as new President and CEO of Volvo Cars. He replaced Stefan Jacoby who left the company. Håkan Samuelsson had been a member of the Board for the last two years and brings with him a broad industrial experience.
Loan agreement with China Development Bank
Under the intent of a Memorandum of Understanding, Volvo Cars and China Development Bank agreed to evaluate financing of Volvo Cars' business plan. In late 2012, a loan agreement was signed - a testament to China Development Bank's belief in the strength and viability of the Volvo Cars global business plan and corporate strategy. The first step under the agreement is a EUR 922 million loan which is to be used for a refinancing of Volvo Cars' current loans.
China expansion
In 2012 Volvo Cars continued to expand its Chinese operations. Volvo Cars' full-fledged business operations in Shanghai include product development, design, purchasing and staff support functions. The expansion of the retailer network and the industrial system goes hand in hand with the recruitments of talented people to add the competence needed. Around 700 people have been recruited during 2012. A new manufacturing plant in Chengdu is the next step and will be a milestone in Volvo Cars' ambitious industrial strategy. This new plant will be up and running in the second half of 2013.
PRODUCT DEVELOPMENT FOR NEXT-GENERATION VOLVO CARS
Volvo Cars' future as a strong, independent car maker was reinforced with the announcement of a multi-billion dollar investment in SPA - Scalable Product Architecture and VEA - Volvo Engine Architecture. SPA is a flexible, scalable product architecture that will cover most of Volvo's future car models. With lower costs for development and parts designed to be shared by all models, there will be more capacity left for focusing on individual details that are important to customers. The first car model based on the new architecture is the next-generation Volvo XC90.
The new engine range VEA will consist solely of four-cylinder engines. Combined with electrification and other spearhead technology, the VEA range will deliver higher performance than today's six-cylinder units, along with lower fuel consumption than today's four-cylinder engines.
Investments in the manufacturing system
As part of the significant investments in the new SPA and VEA projects, construction of the new body shop in the Torslanda vehicle plant in Gothenburg, Sweden is ongoing and will be completed during the second half of 2013. In addition, there will also be considerable investments in the Body Components plant in Olofström, Sweden as well as in the Engine plant in Skövde, Sweden. In Belgium, the Ghent plant will also benefit from the SPA investments. The Ghent plant operates at a very high capacity utilisation level with 2012 being its second best year ever in terms of production volumes. Further, the new Volvo V40 models were successfully introduced in this plant during the year. Also the Chengdu plant in China will, when it starts up late 2013, be ready for the upcoming new vehicle architecture. Further, a flexible manufacturing system for the Volvo S60 model has been introduced which means that volumes can be allocated to the Torslanda and Ghent plants depending on capacity situation.
Strategic partnerships for future vehicle technologies
Volvo Cars also announced a number of technology partnerships. The company revealed in May that it had chosen electronic equipment supplier Mitsubishi Electric Corporation as partner for the next-generation infotainment system for future Volvo cars. Mitsubishi's world-leading knowledge and experience will bring the infotainment system in future Volvo cars up to a world class level. In the area of automotive internet services, Volvo Cars and Ericsson joined forces to advance the technical development of industry-leading, cloud-based innovations. Volvo Cars also signed a Memorandum of Understanding with the members of the CAR 2 CAR Communication Consortium regarding implementation of shared technology for communication between cars in 2016. Also, further steps were taken in the partnership with Siemens to continue the developments of electrification technologies.
Volvo Cars reinforces efficiency leadership with new initiatives in model year 2013
A range of new CO2 initiatives reinforced Volvo Cars' European leadership in fuel efficiency improvement. The model year 2013 line-up saw the introduction of CO2 emissions below 120 g/km for the majority of all diesel-powered versions of the Volvo S60, V60 and S80. The conventional powertrains continue to play a major role on the environmental agenda and they therefore play an important role in improving the average emission performance. In the recent years Volvo has brought CO2 emissions down significantly and further improvement are under development.
SAFETY INNOVATIONS
In 2012 the airbag technology's 25th anniversary was celebrated with the introduction of the groundbreaking pedestrian airbag in the new Volvo V40. This is the first time airbag technology has been used to help protect vulnerable road users, in this case pedestrians, outside the car.
Autonomous driving - with steering, acceleration and/or braking automatically controlled by a vehicle that requires very little human interaction - is a major focus area in Volvo Cars development work in the safety area. It also serves as important tools in Volvo Cars "Vision 2020" where the aim is that nobody should die or suffer serious injuries in a new Volvo car by the year 2020. These new safety systems will also lead to CO2 emission reductions as well as clear customer benefits in terms of flexibility in monotonous driving situations.
Road Train premiere on public roads
The European SARTRE (Safe Road Trains for the Environment) project, in which Volvo Cars is the first and only participating car manufacturer, was successfully completed in 2012. The SARTRE project focused on the attractive possibility of taking the hands off the wheel and the eyes off the road on long motorway trips. The road train offers the best of two worlds - enjoying all the multi-tasking possibilities of public transportation behind the wheel of the customer's own car, while also contributing to lower CO2 emissions and a safer driving environment.
New Traffic Jam assistance system next steptowards autonomous driving
Volvo Cars took further steps in the journey towards self-driving vehicles by presenting a new traffic jam assistance system. The new system, whereby the car automatically follows the vehicle in front in slow-moving queues up to 50 km/h, will be ready for production in 2014. This technology makes driving more relaxed in the kind of monotonous queuing that is a less attractive part of daily driving in urban areas. It offers safe, effortless drive in slow traffic.
Top crash test results for S60 and V60
Volvo Cars' leadership in car safety was also highlighted by the Insurance Institute for Highway Safety (IIHS). Volvo S60 was one out of the two cars that earn the best rating in IIHS's new small offset frontal crash test. No less than five Volvo models - the C30, S60, S80, XC60 and XC90 - have recently earned a Top Safety Pick. The XC60 was also the only SUV crossover with an IIHS Top Safety Pick and an overall 5 star U.S. NCAP rating. Also, the Volvo S60 achieved an overall five star NHTSA crash test rating. In Europe, the Volvo V60 received five stars and was named best car in the Large Family category in the 2011 Euro NCAP rating. The Volvo V60 Plug-in Hybrid scored five stars in Euro NCAP and the highest number of points ever for an electrified car.
2013 OUTLOOK
Competition in the car industry will most likely continue to be as fierce as in 2012 as manufacturers will seek to capture volumes and market shares in a market where the economic situation will remain unstable. 2013 is therefore expected to be a challenging year in terms of margins and growth.
For Volvo Cars, 2013 will be one of the most intense years in the company's history. Volvo Cars is renewing more or less the whole model range. The developments of the new product architecture and engine family will be further intensified and a range of new engines will reach the market in 2013. In China, the opening of the Chengdu plant in 2013 will be a milestone and a major step in the growth strategy.
Links:
http://www.volvocars.ca
