Volvo Investment trip, Wroclaw, May 14-15, 2007
VolvoVolvo TrucksTrucks inin EasternEastern Europe Europe
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Your perception?
Iron curtain One party system Communism Superpower KGB Plan economy Corruption Crime Orphanage Balkan war
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Eastern Europe
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Area
Other eastern Europe India
China
Russia
USA
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Beginning 1995
• 14 persons in Goteborg • 45 persons in Poland, Czech rep and Hungary • Rep office Russia 1 person • Rep office Turkey 1 person • Sales financing 30 Msek • Invoiced units 2,660 trucks
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Strategy
• One national sales organization, local presence • Strategic service points managed by Volvo Trucks representing 50 % of aftermarket business long-term • Other service points – mainly independent workshops
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Truck manufacturers
Roman Jelcz Volvo Liaz Scania Raba Mercedes-Benz Fap MAN Tam Daf Kraz Renault Kamaz Iveco Maz Star Tatra
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 20062006 • Established in 22 countries • Invoiced units 11,080 Est Russia • Very strong profitability Lat Kazakhstan • Strong cashflow Lith Belarus Kyrgyz Poland • 1,550 employees Czech Ukraine Tajik Slvk Uzbekistan Hung Mo SnCr Rom Bs Georg Turkmenistan Sb Bulg Ar Azerb Mk Al Turkey
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Volvo market shares Heavy trucks
Latvia Romania 50 30 40 20 30 20 Volvo 10 10 Scania 0 Mercedes 0 Poland Daf 30 Russia Iveco 40 MAN 30 20 Renault 20 10 10
0 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 YTD YTD Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Weekly order intake
800 700 ☺☺ 600 500 400 300 200 100 0 2003 2004 2005 2006 2007
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Customers
Customer structure Total offer Old communist Value Multi-nationals Service net Western European Image Local companies Relations Modern local businessmen Financing Complete units
Sales performance Units per salesperson Sales districts Product range increased
VolvoVolvo TruckTruck Corporation Corporation 22700 AN, 2007-05-11 Volvo Investment trip, Wroclaw, May 14-15, 2007 International transport Poland
• Present fleet 285 Volvo Trucks • 40 Volvos ordered • Financed by Volvo • Strong in automotive transport (GM) • Manage sensitive glass transport (Pilkington)
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Long-haulage Hungary
• Present fleet 1,200 Volvo trucks • 1,000 Volvos ordered for delivery 3 coming years • Operates Volvo authorized workshops • Expansion into Romania, Bulgaria and Poland • Operates logistic center in Hungary • Long history with Volvo • Ambition to grow stronger and larger
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 National transports Romania
Status • Present fleet 900 Volvo Trucks • 350 Volvos during delivery • Financed by Volvo, 45 MEur • Equipped with Dynafleet • Forced buy-back • Trade-ins Future • Fleet of 2,500 heavy trucks in 2009 • Entering distribution and construction segment • Develops logistics, land purchased • Expands into Moldavia, Bulgaria, Ukraine and Serbia
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Construction Russia
Established 2002 3,500 employees Profession – road and airport construction Truck fleet – 220 Volvo and 100 Kamaz 500 units subcontracted Volvo purchase 2006 – 120 Volvo FM construction units Planned purchase 2007: 250 construction units
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Products
Complete new product range Keep price leading position Soft offers Increased focus Sales organisation awareness and knowledge
Product strategy to secure profitability short-term and long-term
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Volvo Financial Services
Products Financial performance • Cross boarder • Penetration up to 60% • Financial lease • Remaining 40 % is mainly cash • Installment credit • Portfolio 6,500 Msek Portfolio quality very good with low Establishments • loss ratio • Seven local finance companies • Sales finance managers in all Volvo Truck sales offices • Follows Volvo Trucks local presence
OneOne team,team, oneone offeroffer forfor thethe customercustomer
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Vehicle population
Present vehicle population: 103,000 Volvos
Maintain market leader position in terms of vehicle population Capitalize on vehicle population Security for investments Build profitable population Secure profitability short and long-term Provide partners with business opportunities
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Aftermarket
Workshop net • 34 own workshops • 116 private workshops Coverage • To customer needs Business performance • Good Mindset • Change from Aftermarket to Commercial aftermarket Investments • Own workshops and private – same standard
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Image
Very strong brand image Constant improvement to maintain position Wanted position is No 1
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Market outlook
Strong and fast development of GDP Substantial foreign investments Major investments in infrastructure Increased consumption EU entry – Romania and Bulgaria Increased access to funding 480 million inhabitants High oil prices Large demand for modern transport equipment
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Strong GDP growth GDP/capita (USD) 25 000 Western Europe average 2006 = 35 738
20 000
15 000
10 000
5 000
0 2006 2007 2008 2009 2010
Bulgaria Romania Russia Poland Lithuania Latvia Czech rep Source: Global Insight Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Private Consumption Growth
170 2003: index 100 160 2001=Index 100 150
140
130
120
110
100 2004 2005 2006 2007 2008 2009 2010
Bulgaria Romania Russia Latvia Lithuania Poland Czech rep Source: Global Insight
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Infrastructure
Investments Bulgaria 4,300 MEur Ukraine 9,105 MEur 2010-2013 Romania 11,600 MEur Poland 8,100 MEur Serbia 1,900 MEur Lithuania 128 MEur Russia 108,000 MEur Hungary 517 MEur Road network Bulgaria 85 Ukraine 28 density Romania 26 Poland 97 km/100 sq km Serbia 28 Lithuania 108 Russia 38 Hungary 76 EU norm 110
Investments anticipated to continue on high level
Source: Global Insight
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007
Helsinki Nizhniy Novgorod Pan-European St Petersburg transport corridors Moscow
Berlin Minsk East-West trade Warsaw Kiev Transport efficiency Lviv Wien Important for Odessa economic growth Belgrad Bucharest Constanta Investment in Black Sarajevo Varna Sofia Sea ports Skopje Istanbul
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007
It'sIt's notnot justjust aa walkwalk inin thethe parkpark
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Road transport goods volumes Indexed 180
160
140
Eastern Europe 120 Western Europe
100
80
60 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun 2003 2004 2005 2006 Source: Eurostat Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 AutomotiveAutomotive industryindustry
Skoda Honda Renault Suzuki Toyota Dacia Fiat PSA Hyundai VW GM Mercedes Ford KIA Daewoo
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Total market heavy trucks
Total market Growth Total market Growth 2006 vs 2005 2006 vs 2005 Bulgaria 1,650 107% Poland 11,360 45% Croatia 1,080 27% Romania 5,070 59% Czech rep 6,260 14% Russia 9,080 92% Estonia 1,340 94% Slovakia 3,330 31% Hungary 3,780 14% Slovenia 1,670 39% Latvia 1,950 99% Turkey 38,730 0% Lithuania 2,690 20% Ukraine 1,200 102%
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Growth in Eastern Europe Total market, heavy trucks
180 000
160 000 Growth 140 000 2006-2010: 120 000 ≈100%
100 000
80 000 EU 17, 2006: 60 000 263,000 units 40 000
20 000
0 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Truck sales development Heavy trucks
units 12000
10000 Future? 8000
6000
4000
2000
0 2002 2003 2004 2005 2006 Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Russia market size Heavy trucks
55000 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2000 2001 2002 2003 2004 2005 2006
Imports (new and used) CIS brands
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Volvo position in Russia Sales of new and used heavy trucks
8000
7000
6000
5000
New 4000 Used
3000
2000
1000
0 Volvo MAN Scania RVIFreight- Freightl Iveco MB DAF InternatInter- Tatra Other liner national
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Factory in Russia
Present assembly capacity in Zelenograd, 500 Volvo trucks/year
Volvo Trucks invests in a new assembly facility in Russia Capacity 10,000 Volvo trucks/year Estimated completion 2009 Expected location Kaluga
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Business potential
Total market = 500 heavy trucks/1 million inhabitants
Potential total market Volvo sales 240,000
Volvo sales 2006 11,080
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Spain MEUR Infrastructure investments
7000
6000
5000 EU entry Jan 1986 4000
3000
2000
1000
0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Total market heavy trucks 1985: 8,100 2005: 32,000
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Development plan
2006 Future Truck sales, units 11,080 Volvo vehicle population 103,000 W/c employees 741 Truck salesmen 188 Sales offices 85 Workshops 116 Volvo Truck Centers 34 Volvo mechanics 520
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007
NetworkNetwork
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007 Volvo Way
People development
Market development
2006 Time
Volvo Truck Corporation Volvo Investment trip, Wroclaw, May 14-15, 2007
picture on product range
Volvo Trucks is very strong in Eastern Europe with large growth potential
Volvo Truck Corporation