Reporting by product area
The Volvo Group's operations are organized in nine business areas: Volvo Trucks, Renault Trucks, North American Trucks, Trucks Asia, Buses, Construction Equipment, Volvo Penta, Volvo Aero and Customer Finance. In addition to the nine business areas, there are other operations consisting mainly of business units that are designed to support the business areas' operations. The business units include Volvo Powertrain, Volvo 3P, Volvo IT, Volvo Logistics and Volvo Parts. As the four truck brands share product development, production and other activities in business units such as Volvo 3P and Volvo Powertrain and also share certain infrastructure in distribution such as dealers, the four truck brands are reported as one aggregated business segment. The Volvo Group is thus reported divided in six segments in which net sales and operating income are reported for each product area.
Each business area, except for Customer Finance, has total responsibility for its operating income, operating capital and operating cash flow. Volvo Financial Services within Customer Finance has responsibility for its net income and total balance sheet within certain restrictions and principles that are established centrally. The supervision and coordination of treasury and tax matters is organized centrally to obtain the benefits of a Group-wide approach. The legal structure of the Volvo Group is based on optimal handling of treasury, tax and administrative matters and, accordingly, differs from the operating structure.
The business units are designated to support the business areas and are therefore not reportable business segments. The results from the synergies created in the business units are transferred back to the various product areas. The allocation is based on the degree to which individual product areas have utilized the services of the business units. The heading Other contains mainly earnings linked to corporate functions including the Group's treasury operations. The Group’s real estate, held in Volvo Group Real Estate, is reported under industrial operations, and earnings are transferred back to the business areas.
Reported segment information is based on the information used internally by the chief operating decision maker, which in Volvo is the Volvo Group Executive Committee.