Volvo Group HeadquartersVolvo Group Investor Update, London1 June 27, 2016
Volvo Group Investor UpdateLondon, June 27, 2016
Volvo Group HeadquartersVolvo Group Investor Update, London2 June 27, 2016
Reflections after the first eight months
Volvo Group Headquarters
3
The Volvo Group journey continues
1999-2011ACQUISITION-DRIVEN
GROWTH
Scale, synergies & geographical expansion
2016 IMPROVED
PERFORMANCE
Customer focus, simplicity, speed,
continuous improvements, organic growth
2012-2015TRANSFORMATION TO
CLOSE THE GAP
Product renewal, brand positioning & cost efficiency
Volvo Group Investor Update, LondonJune 27, 2016
Volvo Group Headquarters
The Volvo Group is well invested with unique and strong assets to build on
4
Leading brands and products for each segment
Competitive technology platforms
Modern industrial footprint Global distribution and presence
Customer satisfaction and loyalty
June 27, 2016Volvo Group Investor Update, London
Volvo Group Headquarters
The Volvo Group is well investedCapex (PPE) significantly above depreciation for 15 years
Volvo Group Investor Update, London5 June 27, 2016
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
0
5
10
15
20
25
30
35
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total investments Ratio capex/depr (PPE) Average ratio
SEK bn
Cash R&D+PPE+Leasing vehicles
Volvo Group Headquarters
6
Improved performance
Volvo Group Investor Update, LondonJune 27, 2016
2015
2014
Good performance Medium performance Lower performance
Volvo Group Headquarters
Volvo Group Headquarters
STRATEGIC PRIORITIES moving forward
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3456
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Volvo Group Investor Update, London8 June 27, 2016
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London9
Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London10
Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group Headquarters
Our customers - our business
Volvo Group Investor Update, London11 June 27, 2016
DISTRIBUTION France MINING Indonesia
LONG-HAULAGE EuropeCONSTRUCTION US
Driver
Fuel
Repair & maintenance
Vehicle
Admin
Volvo Group Headquarters
12Volvo Group Investor Update, London
Truck brands
Volvo Trucks
EU30 15.7%NA
12.2% Taiwan 17.9%
Brazil 20.1% Australia
14.9%South Africa 13.3%
June 27, 2016
West & South 14.6%
North & Central 3.5%
Renault Trucks
Mack Trucks
CA 7.3%
US 8.0%
UD Trucks
HD 18.3%MD 5.8%
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London13
Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain– and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group HeadquartersVolvo Group Investor Update, London14 June 27, 2016
Value offering to succeed in emerging markets
Long-haulage customer in Europe
Driver
Fuel
Repair & maintenance
Vehicle
Operating cost structure for a value truck customer
Driver
FuelRepair & maintenance
Vehicle
Volvo Group Headquarters
Dongfeng Commercial Vehicles
(45% ownership)
VE Commercial Vehicles(46% ownership)
UD Quester
15
Creating a separate eco-system in the value segment
Volvo Group Investor Update, London
Cabs
Technology & components
June 27, 2016
2015:HD 13.8%MD 18.9%
2015:HD 3.7%MD 33.5%
YTD May 2016:Thailand HD 4.0% (2.2)Indonesia HD 15.2% (5.8)
Engines Transmissions
Purchasing & supply chain
Networks
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London16
Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group Headquarters
17
COMMON COMPONENTS AND VERSATILE MODULES
MODULARITYBASED ON COMMON ARCHITECTURE
BRAND UNIQUE/CUSTOMER-TAILOREDSOLUTIONS
EFFICIENCY IN THE VALUE CHAIN
Industrial structure
Common processes
Production flow
Common Architecture Shared Technology (CAST) to drive efficiency
June 27, 2016Volvo Group Investor Update, London
Engines
Electricalsystem
Transmissions
Chassis
Connectivity
Volvo Group Headquarters
CAST where it matters
18Volvo Group Investor Update, London
June 27, 2016
Differences in customer needs
High Low Scale / Critical massLow
High
Technology C
Technology A
Component A
Component C
Component E
Technology B
Component BComponent D
Volvo Group Headquarters
R&D – improve efficiency
Volvo Group Investor Update, London19 June 27, 2016
+ Improved product quality+ More stable workload+ Less project complexity+ Improved R&D productivity+ Less risk+ Competence retained and developed+ Empower people
Continous introductions Debundle large projects
into several Continuous improvements
Volvo Group Headquarters
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ALTERNATIVE DRIVELINES & FUELS
Taking the lead in new technologies
Volvo Group Investor Update, LondonJune 27, 2016
AUTOMATION CONNECTED PRODUCTS
>500.000
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London21
Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group Headquarters
Governance for continuous improvements
Volvo Group Investor Update, London22 June 27, 2016
Operational level
Portfolio level
Strategic level
Volvo Group Headquarters
Creating a culture for continuous improvements
Volvo Group Investor Update, London23 June 27, 2016
Volvo Production System
Agility and flexibility in production volumes
Variant reduction
Continous introductions
Quality
Brand/ regionalized value chains
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London24
Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group HeadquartersVolvo Group Investor Update, London25 June 27, 2016
Customer loyalty starts in retail
Volvo Group Headquarters
Great potential in increasing service sales
Untapped potential Potential
service sales
Captured service sales
Volvo Group Investor Update, London26 June 27, 2016
Volvo Group Headquarters
Untapped service potential - illustrative
Volvo Group Investor Update, London27 June 27, 2016
Untapped potential on existing fleet
Market share
Products/services
Untapped market share potential
Uptime services
Insurance
Financing
Workshop
Vehicles / Machines
Parts
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London28
Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group Headquarters
Leverage Group assets
Volvo Group Investor Update, London29 June 27, 2016
All business areas to deliver on P&L responsibility ...
... with ability to pull on Group-common assets: Customers & dealers Powertrain technology Financial services Electromobility Knowledge & talent Etc.
Volvo Group Headquarters
Strategic priorities
Volvo Group Investor Update, London30
Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands
Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments
Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System
Establish brand specific sales operations with focus on retail excellence and a growing service business
Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership
Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets
Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance
1
3456
2
7
June 27, 2016
Volvo Group Headquarters
Continuously review commercial performance and take action
Volvo Group Investor Update, London31 June 27, 2016
Product lines, services, market areas, segments, product projects, variants etc.
Exit
Develop
High frequencyfollow-ups
Volume
EBIT
Volvo Group Headquarters
What we want to achieve Clear leadership and profit
and loss responsibility for each brand
Those closest to the customer are empowered to make the right decisions
More regionalized value-chain approach
Simplicity, improved speed
A mindset for continuous improvements
32Volvo Group Investor Update, London
June 27, 2016
Volvo Group HeadquartersVolvo Group Investor Update, London33 June 27, 2016
Q&A
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