VOLVO FINANCIAL SERVICES. company presentation

Transcription

1 VOLVO FINANCIAL SERVICES company presentation

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3 FINANCIAL SERVICES FOR TOMORROW S TRANSPORT MARKET IIn 2001, Volvo joined several of its existing business units and created Volvo Financial Services (VFS), a new Business Area within the Volvo group. The operations of VFS include customer finance, insurance, real estate and treasury activities. Our vision is to be valued as a world-class provider of financial and related services for the Group s external and internal customers. We are here to support Volvo over the long haul. Unlike other finance companies or banks, our focus is exclusively on the brands which make up the Volvo Group. So we form a vital link with our sister companies in marketing their products, both new and used. We participate in new product launches as well as sales campaigns. We know what our customers businesses are really like, and we have in-depth knowledge of the products they use daily. Our customers rely on us for favorable financing as well as insurance and maintenance contracts. We strive to find creative and integrated solutions, such as contract hire agreements in England, Consorcios (pooled financing) in Brazil, or fuel tax and mileage reporting in the U.S. We have the ability to stay in constant touch with Volvo s customers, long after they have purchased a Volvo product. One of our main challenges is to strike a proper balance between risk management on the one hand, and profitability on the other hand. Simply put, the deals we support must be prudently underwritten, and they must be competitively priced. We believe that our intimate knowledge of the Volvo Group s products help us to achieve the right balance and add value to the whole enterprise. In addition, VFS companies purchase insurance for the Group, and yet others manage Volvo s Gothenburg-based manufacturing and office facilities. Volvo Treasury deserves special mention as a well-established Volvo enterprise. It works closely with the financial world and, combined with our own financial strength, enables us to develop competitive financial solutions. In short, VFS is becoming a full service provider, expanding its financing to all of the Volvo brands and business areas. As a diversified financial services company, VFS is dedicated to enhancing the competitiveness of Volvo and its dealers, thereby increasing shareholder value. Sal Mauro President & CEO

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5 VOLVO FINANCIAL SERVICES IN BRIEF Volvo Financial Services was formed as a separate Business Area in The units that make up the company were earlier separate centers of expertise within the Volvo Group. By bringing them together in a single Business Area, Volvo formed a strong and focused supplier of transport-related financial services. Volvo Financial Services provides services in five main areas: Customer financing Insurance Treasury (in-house bank) Real estate management Other services Customer financing, insurance and other services are connected closely with Volvo products and are directed primarily toward external customers. The real estate and treasury functions are of greater importance for customers within the Volvo Group. Insurance, treasury and real estate management services are provided by separate, dedicated organizations. Customer financing is divided into three large geographical areas, each comprising of companies that focus on a particular country or market. (See below.) Volvo Financial Services Customer Finance The Americas Customer Finance Europe Customer Finance International Treasury Insurance Real Estate (Danafjord) 5

6 GROWING DEMAND FOR OUR SERVICES Demand for financial services is increasing steadily among Volvo s customers. Today our customers operate in markets characterized by rapid change. Decisions on investments often have to be made quickly. In addition, customers demand financial solutions that are adapted to their business. Customers today want to use a full-service supplier to gain access to all the services related to their products. Everything that can be associated with a product insurance, service and financing, for example should be available from a single supplier in order to satisfy customers requirements. Simplicity and customer-adaptability are key concepts in this connection. In short, the portfolio of services offered by Volvo Financial Services can significantly influence the customers purchasing decision. Our customers desire to have close control over costs is another important driving force. More and more vehicle owners want to know the exact perkilometer or mile costs of each vehicle. Volvo Financial Services adds value and creates profitability by bundling a customer s lease agreement, maintenance contract and insurance coverage, for example. If the total costs can be included in a single package from the same supplier, it is easier for the customer to control costs. Transport industries are generally highly cyclical, with strong fluctuations in demand. Solid financing underlying a company s fixed assets with solutions that benefit all parties thus become an extra source of security. Customers will turn to a financial partner in whom they have confidence. It is therefore absolutely necessary that Volvo offers well-developed financial services with the same high quality as its products. 6

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9 FIVE BUILDING BLOCKS IN OUR OPERATIONS Financial services are a significant part of Volvo s strategy for becoming the world s leading provider of commercial transport solutions. Volvo has been active in the field of financial services since When Volvo Financial Services (VFS) was formed as a separate Business Area in 2001, a new, unified structure for these services was created. VFS represents Volvo s response to the market growing need for customer-focused, integrated financial solutions. As a diversified financial services company, VFS is dedicated to enhancing the competitiveness of Volvo and its dealers, thereby increasing shareholder value. The company is active in the following five areas: Customer financing VFS offers Volvo s customers a variety of services in this area. This applies to buyers of trucks, construction equipment, buses and engines for marine and industrial applications, as well as aircraft engines and spare parts. VFS is active in markets where over 80% of Volvo s products are sold. Customer financing involves installment contracts in which the product serves as collateral, as well as financial leasing and operational leasing. Service and maintenance contracts are also offered separately or combined with financing services in most markets. It also includes inventory and real estate financing for Volvo s dealers. The greater part of the customer financing is provided in the Group s Truck Business Areas, which contain the Volvo, Renault and Mack makes. These three Business Areas account for approximately 80 percent of Volvo Financial Services financing. However, products from Volvo Construction Equipment, Volvo Buses, Volvo Aero and Volvo Penta are increasingly being financed by VFS. The major markets of North America and Western Europe account for nearly 90 percent of all customer financing. Insurance In this area, VFS Insurance offers a full complement of products including liability, physical damage insurance, GAP and life coverage for Volvo customers and their vehicles. Here, too, truck volume accounts for the greater part of sales. In the U.S., VFS Insurance has a successful cooperation with Volvo Action Service (VAS), which is Volvo s global highway-assistance service for truck drivers. When an unscheduled stop occurs due to a claim, the driver calls VAS to promptly schedule repairs at the nearest action service workshop. The combination of VAS and insurance service is highly successful, and the concept is currently being introduced in several markets in Europe. In addition to insuring the risks inherent in the transportation industry, VFS Insurance also insures certain risks of the Volvo Group. Utilizing reinsurance companies located in Luxembourg, Sweden and Ireland, VFS Insurance minimizes the liability, commercial property and business interruption risks associated with the operations of a multinational manufacturing concern. VFS Insurance strives to offer Group companies consistent, specialized and efficient access to alternative risk markets. 9

10 Treasury (in-house bank) Volvo Treasury serves as Volvo s in-house bank. As an integrated business partner, it coordinates the Group s internal and external largescale financial transactions. These include management of the interest bearing assets and liabilities, global funding and foreign exchange operations, as well as cash management and pooling activities. The unit has well-developed relations with banks and other financial institutions. The business concept is that Volvo Treasury by providing transaction services, optimizing interest rates, securing funding and managing financial risks should contribute to the development of the Group in the financial markets and thereby enhance profitability. Real estate Danafjord AB is responsible for real estate management within Volvo Financial Services. The company provides leases and adapts premises for companies in the Volvo Group, or for operations of interest to Volvo. The greater part of the properties operated and owned are commercial and are located in the Göteborg region. Included is an agreement with Ford to administer the real estate of Volvo Car Corporation in Göteborg. Danafjord s key real estate management activities include property maintenance, construction and infrastructure, with a commitment to quality, safety and care for the environment. Other services Road Manager Financial Services specializes in compliance services for the North American truck industry. It offers of services such as fuel tax and mileage reporting, permitting and licensing. The goal is to assist truck companies in complying with government regulations, thereby helping them to be successful in an ever-changing industry. Volvo Commercial Credit Corp. also offers a versatile, new purchasing card for small businesses and fleet companies. The card, which is offered in conjunction with MasterCard International Incorporated, has been specially designed to serve the purchasing, management and reporting needs of this important business segment. The card makes it possible to track and manage costs incurred by a customer for fuel, spare parts, lodging and meals, for example in a single statement. The card also provides a host of features comparable to the best corporate card programs. Fortos Financial Consulting serves customers both internal and external to the Volvo Group. Fortos effective methods, tools and training support the client s goals for long term improvement of net income and cash flow through increased awareness and competence. 10

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12 FINANCE COMPANIES The Americas Region The Europe Region The International Region Treasury Centers 12 Brazil Canada Mexico Peru United States VFS Headquarters Austria Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland United Kingdom Australia Thailand Volvo Finance International Brazil Singapore Sweden United States

13 A COMPANY WITH A GLOBAL PRESENCE The head office of Volvo Financial Services is located in Montvale, New Jersey, in the United States. VFS Insurance is also headquarted in Montvale. In addition, there are 22 customer finance companies, four Treasury Centers and the head offices of the treasury and real estate (Danafjord) operations in Göteborg, Sweden. The finance companies generally operate in single markets, except for Volvo Finance International, which is active in Eastern Europe, Asia and other markets. The finance companies are organized by regions: The Americas Region, Europe Region and International Region. Total assets SEK Bn Net income SEK M Employees at year-end Market penetration, trucks Retail volume SEK Bn Dec ,028 Dec , % Dec Dec , %

14 TOGETHER WE ARE STRONG Volvo is one of the world s leading suppliers of commercial transport solutions. The Group manufactures trucks, buses, construction equipment, power systems for marine and industrial use, as well as engines and engine components for aircraft. Our product range also includes customeradapted total solutions for financing, leasing, insurance and service, as well as traffic systems for major urban areas. The shared strategic and financial strength of the Volvo Group provides opportunities for aggressive initiatives, which through acquisitions and cooperation open the door to both a wider range of products and new markets for all product areas. Coordination in research and development between the companies provide other extensive opportunities. One example is the Volvo Powertrain, the unit that develops and produces diesel engines and transmissions for trucks, buses and construction equipment, an integration that also benefits Volvo Penta. Through coordination and joint development projects, the scope for what Volvo companies are able to accomplish is constantly broadened. Allow us to present the other business areas of the Volvo Group: Mack Trucks is one of the largest manufacturers of heavy-duty trucks in North America, with a market share of 14.6% (2001) in the US "Class 8" segment. In the vocational segment, Mack is the indisputable leader, with nearly 30% (2001) of the US conventional straight truck market, and 70% (2001) of the US low cab-over-engine straight truck market. Mack reinforced its leadership position in the construction segment with the launch of its new Granite series in The Mack CH model is a leader in regional heavy distribution applications, and the Vision by Mack tractor is designed for demanding long-haul assignments. Mack vehicles are sold and serviced in more than 45 countries worldwide. Renault Trucks is one of Europe s largest truck manufacturers. Its product range comprises everything from light trucks for urban distribution, to heavy trucks for long-haul operations and military vehicles. In 2001, Renault held 12.3% of the European market for heavy trucks (>16 tons) and 11.9% for trucks of 6 to 16 tons. The heavy segment includes the new Renault Magnum for long-haul transports, which was introduced in Renault also offers a modern selection of light and medium-weight trucks that correspond to more than 40% of the company s manufacturing. Volvo Trucks is the world s second largest manufacturer of heavy trucks. Vehicles weighing more than 16 tons account for about 90% of production. Volvo Trucks market share for heavy trucks in 2001 was 14.5% in Western Europe (>16 tons) and 10% in the US (>15 tons). During 2001 and 2002, the product program is being renewed extensively through the introduction of new Volvo FH models for heavy long-haul transports and the new Volvo FM models for regional transports and construction applications. Volvo Trucks products are marketed in more than 120 countries, with most sales in Europe, North and South America, and Asia. Volvo Buses is the world s second largest manufacturer of large buses and bus chassis. The product range consists primarily of diesel-powered vehicles for city, intercity and tourist operation. Volvo Buses is also Europe s leading manufacturer of natural-gas-powered buses. Operations also comprise transit systems for major urban areas. During the past year, the product range was substantially renewed with the introduction of a new product platform for intercity buses and tourist coaches. Volvo Construction Equipment is one of the world s largest manufacturers of equipment for the construction industry, with production on four continents and sales in more than 100 countries. Volvo Construction Equipment s products are used for a number of different purposes, such as civil engineering projects, extraction and recycling operations, and in the mining and forestry sectors. The product range includes wheel loaders, excavators, motor graders and articulated haulers, small wheel loaders and excavators as well as compact wheel loaders, excavators and backhoe loaders. In addition, the company will expand its customer offer with a range of telehandlers and skidsteer loaders. Volvo Penta is a world leading, global manufacturer of engines and complete drive systems for marine and industrial use. Development and manufacture is concentrated in Sweden and the US, while sales and service are conducted worldwide through a strong network consisting of more than 5,000 agents. Volvo Penta maintains operations within three different business segments, Marine Leisure, Marine Commercial and Industrial. Volvo Aero has broad operations within the aerospace industry and is a world-leader in the development and manufacture of certain strategically selected advanced engine components. These components from Volvo Aero are to be found in more than 80% of all larger commercial aircraft. Volvo Aero Services (previously the AGES Group) operates worldwide, selling aircraft engines and spare parts for aircraft and aircraft engines. Maintenance, repairs, spare parts and financial services form more than half of Aero s sales. Operations are characterized by innovative business solutions in far-reaching cooperation with customers and partners. 14

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16 Volvo Financial Services LLC 25 Philips Parkway Montvale, New Jersey USA , Engelska. Printed in Sweden.