Product renewal for the European markets
- Complete renewal of Renault Trucks’ product ranges
- Continued strong order intake
- Operating margin 4.0%
Low registrations in the first half of the year, gradual improvement expected
In the first five months of 2013, 84,705 new heavy-duty trucks were registered in Europe 28 (EU minus Bulgaria plus Norway and Switzerland) a decline of 13% compared with the year-earlier period. This decline is explained by the low demand during the second half of 2012. The high level of orders in the past six months suggests that pre-buy purchases will continue to support demand in 2013 despite the unfavorable economic climate. The outlook for the total market for heavy-duty trucks in Europe is that it will reach a level of about 230,000 trucks (unchanged forecast).
Through June 2013, the total North American retail market for heavy-duty trucks decreased 11% to 111,834 vehicles, compared with 125,590 in the first six months of 2012. While overall economic signals continued to be mixed, the housing recovery appeared to maintain its momentum. The construction truck segment continued to show signs of recovery after years of weak performance, but the primary market driver continues to be replacement demand in the highway segment. In 2013, the total market for heavy-duty trucks in North America is expected to stay at a level of about 250,000 trucks (unchanged forecast).
In the first six months of 2013, the Brazilian market for heavy-duty trucks increased 13% to 49,344 vehicles, compared with 43,771 in the first six months of 2012. The Brazilian market is expected to grow in 2013 driven by ongoing low financing rates, infrastructure investments and a strong crop season. The total Brazilian market for heavy-duty trucks is expected to increase and reach a level of about 105,000 trucks in 2013 (unchanged forecast).
In China, the total market for heavy-duty trucks is expected to reach a level of about 630,000 trucks in 2013 compared with 636,000 trucks in 2012 (unchanged forecast). The total market for medium-duty trucks in China is expected to reach a level of about 305,000 trucks in 2013, compared with 290,000 trucks in 2012 (unchanged forecast).
In India, the total market for heavy-duty trucks in the first six months of 2013 declined by 31% to 75,148 trucks (109,172) following a slowdown in the economy and decreases in fuel subsidies. Demand is expected to pick up and the outlook for the total market for heavy-duty trucks in India is 160,000 trucks in 2013 compared with 185,000 trucks in 2012 (previous forecast 195,000 heavy-duty trucks). The total Indian market for medium-duty trucks is expected to reach a level of about 85,000 trucks in 2013, compared with 94,000 trucks in 2012 (previous forecast: 95,000 trucks).
Through June, the Japanese heavy-duty truck market declined by 11% compared with the first six months of 2012. Economic measures by the government have started and the significant ongoing investment into the public works project is likely to stimulate the Japanese economy. For 2013, the total Japanese market for heavy-duty trucks is expected to increase to about 35,000 trucks (unchanged forecast).
Deliveries recovering since the first quarter
In the second quarter of 2013, the Volvo Group delivered a total of 51,984 trucks, which was 4% less than in the second quarter of 2012 but a full 35% higher than in the first quarter of 2013.
The total net order intake continued on a high level during the second quarter. Orders were up by 16% in the second quarter compared with the year-earlier period. Total net orders of 56,349 trucks and deliveries of 51,984 trucks resulted in a book-to-bill ratio of 108% for the Group’s wholly-owned operations.
In the second quarter of 2013 European orders reached 24,350 trucks, which was 13% higher than in the second quarter last year. Orders for Volvo Trucks increased by 19% and orders for Renault Trucks increased by 6% compared with the second quarter last year. Despite the unfavorable economic climate in parts of Europe, the high order intake over the past six months indicates that some customers are choosing to renew their truck fleets ahead of the new emissions legislation Euro 6, which will be implemented on January 1, 2014.
In North America, order intake during the second quarter increased by 39% compared with the second quarter last year with a particularly strong development for Mack.
In South America, orders continued to improve, partly due to favorable financing rates and improved economic outlook in Brazil. Order intake in the second quarter increased by 38% compared with the same quarter last year.
Compared with the second quarter of 2012, orders in Asia and to Other markets declined by 3% and 4% respectively.Operating margin of 4.0% due to higher sales and improved capacity utilization
During the second quarter of 2013, the truck operation’s net sales amounted to SEK 46,234 M, which was 8% lower than in the second quarter of 2012 but 25% higher than in the first quarter of 2013. Adjusted for changes in exchange rates net sales declined by 1% compared to the second quarter last year. Lower sales were experienced in all regions except in South America.
The truck operations posted an operating income of SEK 1,835 M in the second quarter of 2013 compared with an operating income of SEK 4,284 M in the second quarter of 2012 and an operating income of SEK 101 M in the first quarter of 2013. The operating margin was 4.0%, compared with 8.5% in the year-earlier period and 0.3% in the first quarter of 2013. The improved operating income compared with the first quarter is a result of higher sales and improved capacity utilization in the industrial system. Compared to the second quarter last year earnings were negatively affected by continued high investments in research and development for the comprehensive product renewal and also by related launch costs in the production, sales, and aftermarket support functions. Among the projects are the new Volvo FH series, the new Volvo FM series, the new Volvo FL and FE and the new Volvo FMX truck, the new Renault Trucks T, C, K and D ranges, a new heavy-duty truck range adapted to growth markets, a new medium-duty engine range and legislation-driven research and development for the Euro 6 emission standards.
In the second quarter of 2013, operating income in the truck segment was negatively impacted by an increase in warranty reserves of SEK 900 M and a positive impact from divestiture of non-core operations of SEK 99 M.
Compared with the second quarter of 2012, operating income was negatively impacted by changes in currency exchange rates in an amount of SEK 864 M.
Operating income in the second quarter of 2012 was positively affected by VAT credits in Brazil of SEK 314 M relating to previous years.Complete renewal of Renault Trucks’ ranges
On June 11, Renault Trucks launched a complete renewal of its product portfolio with the introduction of the new long distance T range and the new C and K ranges of construction trucks as well as the new D range of distribution trucks. Renault Trucks is taking advantage of the switch to the Euro 6 standard to totally renew its entire range. This renewal has been the object of an investment by the Volvo Group of over EUR 2 billion over five years and it is the first time that any manufacturer has ever renewed its entire range at a single stroke.Volvo Trucks to commercialize DME-powered vehicles in North America
In June, in addition to the CNG and LNG offering Volvo Trucks announced plans to commercialize dimethyl ether (DME)-powered heavy-duty commercial vehicles in North America. Converting natural gas to DME is an innovative way to address many of the distribution, storage and fueling challenges otherwise presented by natural gas as a heavy truck fuel. Production of DME-powered vehicles is planned to begin in 2015.Volvo Trucks has renewed its entire European truck range in eight months
Since September 2012, Volvo Trucks has launched five new truck models. It all began last year with the spectacular launch of the new Volvo FH, followed this year by the introduction of the new Volvo FM, Volvo FMX, Volvo FE and Volvo FL. All the new models include innovations and features that make the driver’s job easier and more efficient. The new trucks will also gradually be introduced on other markets across the world.