Development by continent – Asia

Asia growing in importance

Through both acquisitions and organic growth, the Volvo Group has created a good position from which to develop further in the dynamic markets in Asia.

Weakening markets
Asia accounted for 23% (24) of net sales during 2012. In 2000 the figure was 7%. The sharp increase has primarily been achieved by the acquisitions of UD Trucks of Japan (named Nissan Diesel at the time of the acquisition), the majority in Lingong of China and through the joint venture VECV in India, but also through organic growth. In the beginning of 2013, the Volvo Group signed an agreement to purchase 45% of the Chinese truck manufacturer Dongfeng Commercial Vehicles, which will give a strong presence on the Chinese truck market - the world's largest.

In Japan the total market for heavy-duty trucks in 2012 rose by 28% to 31,800 vehicles (24,800) partly driven by government incentives as well as the need for trucks for reconstruction work following the earthquake and the tsunami. For 2013, the total Japanese market is expected to increase to about 35,000 heavy-duty trucks on the back of expectations of higher economic activity stemming from governmental stimulus activities and a weaker currency.

In India, the total 2012 market for heavy-duty trucks declined by 18% to 195,140 trucks (237,300).

In China the largest part of net sales stem from construction equipment. The Chinese construction equipment market continued to weaken in 2012 and declined by 37% (+7%). In Asia outside of China, the market for construction equipment grew by 11% (28). For 2013 the total market growth in China is expected to be in the range of minus 5% to plus 5%. Asia excluding China is expected to decline by 0% to 10%.

of Group sales come from Asia
Volvo CE’s new wheel loader L105 has
been developed specifically for
the Chinese market.

Volvo CE number 1 in China
With a volume totaling 248,000 wheel loaders and excavators in 2012, the Chinese market is by far the world's largest, and the Volvo Group is the number 1 in these segments. During 2012 Volvo CE with the brands Volvo and SDLG had a combined market share of 15.0% (12.0) within wheel loaders and excavators. That increased the distance even further to the number two on the market.

Part of Volvo CE's strategy is to develop products for growth markets under the Volvo brand. In November 2012, the medium-heavy wheel loader Volvo L105 was launched. It was developed specifically to meet the needs of customers in China.

Since 1998, Volvo CE's main facility for the development and manufacture of excavators is situated in Changwon, South Korea.

Sunwin, leading within large electric buses
China is a large market for electric buses. Currently there are 1,700 large (over 10 meters) electric buses in China, an increase of 1,000 buses during 2012 alone. Here Sunwin Bus, a Volvo Buses and SAIC Motor joint-venture, has a market share of approximately 40%. During the year, Sunwin Bus delivered 3,250 buses. 512 of these were so called new energy buses, of which 413 were fully electric. That made Sunwin leading in China and a world-leading supplier of large, fully electric buses in 2012.

On September 19, 2012 UD Trucks was
launched in South Korea. First off the
mark was the Quon 6x4 truck.
UD Trucks Korea plans to launch a number
of new models and fully leverage the
Volvo Group’s solid, nationwide network of
25 service points.

Plans to launch Value Trucks
In the next few years, the Volvo Group plans to launch a new series of trucks in the so called value segment, i.e  the lower price segments, in emerging market in for instance Asia, South America and Africa. Production is being prepared in Thailand and India. The Group also intends to manufacture these trucks for the Chinese market in the joint venture DND.

Restructuring in Japan
In Japan, a voluntary leave program was launched with the aim of reducing costs by 10% to improve competitiveness. Compared with mid-2012, the organization was reduced by 1,000 employees and consultants as of January 1, 2013.

In the beginning of 2013, a program to improve the total efficiency in the Japanese production system was launched.

Success and investments in India
During the year, VECV (the joint venture together with Eicher Motors) strengthened its position in the Indian market. The total market for trucks and buses above 5 tons decreased by 12% but VECV's deliveries remained on the same level as the previous year and the market share rose to 12.7% (11.1); the highest so far. Within buses Eicher's share rose to 11.9% (9.7), for trucks 5-14 tons to 31.4% (30.5) and in the heavy-duty segment over 16 tons to 3.9% (3.1).

In India, success continued for VECV with
trucks under the brand Eicher.
Currently investments are made in the
development of new products and in
new facilities.

VECV continues to invest in India. During 2012 and the next few years, some SEK 2 billion is invested in a new factory for medium-duty engines that will be up and running in 2013, a new paint shop, tooling for new products and a new facility for bus chassis. The sum also includes research and development related to a number of new products to be launched the next few years. The investments are made with funds already in VECV and with the company's future cashflow.

Furthermore, Volvo India invests approximately SEK 2.5 billion the next few years, among other things in a new factory in Bangalore for the production of the new truck series planned for the value segment. In addition, investments are made in the development of new products and in a new office in Bangalore where backoffice functions that were previously spread out over the city are to be gathered.

Volvo Buses strong in India
Volvo Buses has a strong position in India and is one of the most well-known brands on the market. In total, 4,500 buses from Volvo are in operation in India. Volvo's city buses run in 13 cities and in the segment for coaches, the company is represented on all important routes. During the year a number of new models were launched, among them the long-distance coach Volvo 9100, which opens up new market segments and increases the potential for growth.