Weak market development and lower volumes

Success for Volvo Hybrids
Volvo Buses hybrids are successful around the world thanks to the combination of environmental performance, drivability, fuel economy and reliability. On the photo is one of Volvo's hybrid buses in operation in Mexico City.

The global market for buses declined in 2012. Sales for Volvo Buses fell and profitability declined.

Volvo Buses is one of the world’s leading manufacturers of buses and bus chassis. The product program comprises complete transport solutions, city buses, intercity buses and coaches, as well as services in financing, vehicle service, vehicle diagnostics and traffic information. Volvo Buses has sales in 85 countries and one of the industry’s strongest service networks, with more than 1,500 dealerships and workshops worldwide. Production facilities are found in Europe, North America, South America and Asia.

The right way in city traffic

Lower fuel consumption and emissions
During 2012, Volvo Buses presented a number of new products, including a program of city buses, intercity buses and coaches for the coming European emission requirements Euro 6. The new buses generate significantly lower emissions of nitrogen oxide and particles, while improving both fuel economy and climate impact, compared with current vehicles. Two of the three new engines included in the program can be driven on bio-diesel. Sales will commence during the second half of 2013.

In India, the product program was increased with three new models, including the Volvo 9100 coach, which will provide Volvo Buses with good opportunities to expand in a new, key segment. At the same time, the expansion of the company’s industrial capacity in India was intensified.

Increased sales of hybrid buses
Volvo Buses is world-leading in hybrid buses and has sold a total of nearly 1,000 vehicles to customers in 20 countries. In 2012, hybrid buses were sold to cities including Curitiba, Hamburg and Gothenburg. The most recent model, the Volvo 7900 Hybrid, has up to 39% lower fuel consumption and climate impact than corresponding diesel buses. During the year, a Volvo 7900 Hybrid articulated bus was introduced, which meant an important strengthening of the hybrid program. From 2014, all low-floor buses sold by Volvo Buses in Europe will be hybrid buses. To satisfy the increasing global demand, Volvo Buses has also started the manufacturing of hybrid bus chassis in Brazil. The first 30 Brazilian-manufactured hybrid buses were put in service in Curitiba in September 2012. 

In parallel, the business area continued to develop the next generation of hybrid buses – so called plug-in hybrids. The technology means that the bus batteries can be charged directly from the electricity mains and that the bus can operate silently and exhaust-free longer distances on electricity alone. Diesel consumption and climate impact emission can be reduced by up to 75%, compared with comparable diesel-driven buses. Field tests using three plug-in hybrids will commence in Gothenburg in spring 2013.

In China, Volvo Buses is a driving force in electro-mobility, partly through the partnership in the bus manufacturer Sunwin Bus, one of the world’s largest manufacturers of fully electric buses, partly through a newly started company for hybrid and electrical drive lines, Shanghai Green Bus Drive System. Sunwin Bus delivered 413 fully electric buses during the year, which made the company the leader in China and a world-leading supplier of fully electric buses over 10 meters in 2012.

Positive reception for new telematic system
Volvo Buses’ new telematic system, which was presented in 2011, has been positively received in the market and is now being used in over 20 countries. Volvo Bus Telematics provides bus operators with better control of the vehicle’s fuel consumption and the opportunity to adapt maintenance to exact requirements. Measures that can generate fuel savings of approximately 10%. Volvo’s hybrid buses are now equipped with the Volvo Bus Telematics hardware.

Fewer deliveries and lower order intake
With the exception of China and India, the global bus market declined in 2012. Volvo Buses delivered 10,678 buses and bus chassis (12,786). At the same time, Volvo Buses’ market share in Europe rose to 13%, thanks to sales of hybrid buses. Markets shares were also strengthened in North America and South America. The total order intake was also lower for 2012 than in the preceding year. However, several important orders were signed during the year, for example, 460 front-engine buses were sold to Belo Horizonte, Brazil – a strategic breakthrough in a new segment – and 475 Nova hybrid buses to Quebec, Canada.

Due to lower volumes and higher pressure on prices, Volvo Buses will concentrate manufacturing of complete buses in Europe to the company’s production facilities in Wroclaw, Poland. This means that manufacturing at Volvo Buses in Säffle, Sweden, will discontinue mid-2013.

Sales and earnings fell
During 2012, net sales fell to SEK 20,295 M (21,823). Operating income declined to SEK 51 M (1,114) and the operating margin decreased to 0.3% (5.1) due to low volumes, a negative market mix and low capacity utilization.