THE ECONOMIC REALITIES of the car industry have had significant impact on Volvo Cars this year. We have experienced increased competition, currency value fluctuation and higher raw material prices. Public focus on safety and climate change has grown even though research data shows that customer willingness to pay for improvements within these areas remains relatively low. From a global perspective, emerging markets continue to grow both as customers and as suppliers to Volvo Cars. We have experienced a decrease of 3.6 percent in our global sales compared with 2005 and a reduction of employees. On the positive side, we have increased sales in China by 50 percent and in Russia by 92 percent compared with 2005 and we launched three new car models during the year.
INNOVATION IS AN IMPORTANT WAY of moving a company forward both from a sustainability and a market perspective. Important requirements for innovation are having a healthy, motivated and diverse work force, listening to our customers and stakeholders in society and capitalizing on brand strengths such as our core values and our heritage. Proof of our innovative capacity was shown in the car models launched during 2006, the Volvo S80 features safety innovations such as Collision Warning with Brake Support, the Volvo C30 is a modern smaller Volvo with design cues from the Safety Concept Car. The Volvo XC60 concept with an ethanol engine shows that alternative drivelines and larger cars can be successfully combined.Facing lower sales and profitability also entails continuous work on efficiency. This year we implemented a number of structural measures and streamlined our operations so that we stand on a firm base. Our workforce decreased seven percent through a carefully planned voluntary programme.
EFFICIENCY FROM A SOCIETAL PERSPECTIVE is focusing on what makes a difference. Keeping the challenge of climate change and energy efficiency in focus, we continue our efforts at improving fuel economy of our current car models and developing alternative drivelines for the future. Our focus in the safety arena is on preventing accidents from happening while we continue improving protective systems.
THIS YEAR, our Sustainability Report is divided into three main areas - safe and sustainable mobility, globalisation and people. The chapters contain information on how we work to innovate within each area and how we strive to increase efficiency. Our aim is that our continuous work within these areas will bring business sustainability and contribute to a sustainable society both in a short-to-medium and in a long term perspective. Achieving this requires partnering with other stakeholders in order to find solutions that are both cost effective and create real change. In this context, it is important for me to reiterate Volvo Cars' commitment to the ten principles of the Global Compact.I hope you will enjoy the report and I welcome your feedback on Volvo Cars' progress within the area of sustainability.
President and CEO, Volvo Car Corporation
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