Truck operations' strategies

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After 15 years of active acquisition strategy and streamlining to commercial vehicles, the Volvo Group has entered a new phase, with a focus on driving organic growth and improving profitability. In the strategy for 2013 – 2015, we have identified five focus areas that have particularly high impact on the truck operation, for which there are 20 strategic objectives. Each objective is clearly defined and measurable and is connected to both financial and operational key performance indicators (KPI's). In addition, there is a clearly defined responsible party for each individual strategic objective.

Key focus area 1: Secure number 1 or 2 in profitability

We operate in a capital-intensive industry. Significant investments are necessary to simply comply with new regulations. Furthermore, a strong financial position affords us the opportunity to act, and to fund innovation and development, and our own expansion. To achieve this, we must excel in turning “volumes into profit” and capture the potential for efficiency that is associated with being a truly global player.

1.1 Increase vehicle gross profit margin per region by 3 percentage points

1.2 Reduce actual standard cost of sales on total cost for current offer by 10%

1.3 Decrease wholesale selling expenses to 5% of sales

1.4 Increase own dealer soft offer absorption rate by 10 percentage points

1.5 Reduce R&D cost (spending pace) to SEK 11.5 bilion

1.6 IT cost on 2% of Volvo Group total cost by 2015


Key focus area 2: Strengthen customer business partnership

Success is based on being the best at solving our customers’ problems and strengthening their operational performance. This is a key factor in building customer loyalty and becoming our customers’ preferred business partner.

2.1 We will achieve 99% product availability contributing to “strengthen customer business partnership”

2.2 Drive retail excellence by implementation of an integrated customer interface tool

2.3 Each brand to rank number 1 on decided brand attributes in competitive set


Key focus area 3: Capture profitable growth opportunities

We want to retain and strengthen our position as a profitable and global player in the truck industry. This is crucial given that high volumes help us achieve economies of scale and maintain our priority position among suppliers and dealers. Organic sales growth shall be equal to or exceed the weighted average for our competitors.

3.1 By optimizing the brand assets become number 1 or 2 in combined Group Trucks HD market share

3.2 Establish required commercial presence to support revenue growth by 50% in APAC (Asia Pacific) and 25% in Africa

3.3 Establish required Order to Delivery footprint and supply chain in APAC and Africa achieving lead time reduction by 15% and capital tied up reduction by 15%

3.4 Increase aftermarket sales per unit in operation by 12%, including total commercial solution offer for second and third owner

3.5 Build SEK 1 billion new businesses complementary to existing offering


Key focus area 4: Innovate energy-efficient transport and infrastructure solutions

Environmental concerns, political demands, megacities and fuel prices are driving regulation and green technology. We must be able to anticipate and act on changing market demands and shifts in technology, and have the capacity to rapidly bring new solutions to market.

4.1 Fuel efficiency to be improved by 2% per annum through vehicle optimization, diesel efficiency and electromobility

4.2 Commercialize alternative fuel technology by launching concepts or products in all regions


Key focus area 5: Build high performing global teams

To outperform competitors and achieve agreed objectives, we must attract and retain people with the right competencies across all of our businesses. Fully leveraging the existing in-depth business expertise and adopting best practices throughout our global organization will set us apart from the competition.

5.1 Become an attractive employer measured by reaching the employee engagement level (EEI) of high performing companies

5.2 Drive high performance measured by reaching performance excellence level (PEI) of high performing companies

5.3 Secure leadership and strategic competencies, primary focus is the implementation of Volvo Group University

5.4 Build an efficient and inclusive organization by implementing common global level 1 and 2 processes