Volvo Trucks Jorma Halonen 1
Trucks Third Quarter Third Quarter First Nine Months SEK M 2002 2001 Change 2002 Change Volume (units) 37,515 31,142 20% 114,618 1% Sales 28,507 25,611 11% 87,619 4% Operating income 673 (340) n.a. 682 52% Operating margin % 2.4% -1.3% 3.7 0.8% 0.3 1) Highlights Increased deliveries in all markets High production levels for Renault Trucks and Volvo Trucks in Europe Positive effects from price realization and synergies New Volvo VN truck range launched Both Mack and Volvo engines compliant with EPA 02 legislation In Focus Production changeover for Volvo VN Secure gradual ramp-up of Mack trucks in New River Valley Continued strengthening of dealers in North America Cash flow 1) Including a gain of SEK 574 M from divestiture of the Mitsubishi holding in 2001 Note: Excluding restructuring costs in 2001 2
Volvo Trucks - Deliveries y.t.d September 2002 Market Area ytd Jan - Sep Change 2002 2001 % Total Europe of which: Western Europe Eastern Europe North America South America Asia Rest of the world 26 434 30 140 (12) 23 042 27 046 (15) 3 392 3 094 10 11 534 10 357 11 3 485 3 481 0 5 902 3 518 68 2 021 1 658 22 TOTAL 49 376 49 154 1 3
Heavy Duty Market Western Europe 250 Units, Thousands (heavy trucks) 225 200 175 150 125 100 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 4
Total Market Heavy Trucks W. Europe Registration Forecast Units Thousands 300 250 236 246 237 208 214 200 150 100 98 99 '00 '01 '02 '03 5
Market Shares Western Europe Volvo Market Share Development Market Shares %, ytd Jan - September 16 GVW 16 ton and above (preliminary) 2002 2001 15 14 13 12 Volvo Renault 13,9 13,0 Mercedes Benz 19.4 18.9 Volvo 13.9 14.7 MAN 13.6 15.6 Scania 13.5 13.6 Renault 13.0 12.0 11 Daf 12.5 11.4 10 98 99 '00 '01 ytd 02 Iveco 11.3 10.5 Sweden, Norway, Finland, Denmark, Great Britain, Eire, Belgium, Luxembourg, Netherlands, Switzerland, Germany, France, Italy, Spain, Portugal, Greece, Austria 6
Volvo Trucks in Europe Emphasise on bottom-line result Good overall performance, P&L and cash flow Price Management Actively well paid for value in the new FH/FM truck family FH / FH program very well positioned Some 30,000 trucks delivered so far Long lead-times for new orders Channel Strategy Opportunities in new environment after block exemption 7
Heavy Duty Market North America 300 Units, Thousands (heavy trucks) 250 200 150 100 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 8
Total Market Heavy Trucks NAFTA Retail Sales Forecast Units Thousands 300 250 NAFTA 255 309 257 200 150 170 172 100 98 99 '00 '01 '02 '03 9
Order Intake North America 30 000 25 000 20 000 Pre-buy US 02 Industry built 15 000 10 000 5 000 Net orders 0 j f m a m j j a s o n d j f m a m j j a s 10
Market Shares North America Volvo Market Share Development Market Shares %, ytd Jan - September 15,0 13,0 11,0 Mack 13,4 2002 2001 Freightliner 29.0 29.4 International 16.2 16.1 Kenworth 14.1 10.9 9,0 7,0 5,0 Volvo 8,0 98 99 '00 '01 ytd 02 Mack 13.4 14.1 Peterbilt 11.4 10.1 Volvo 8.1 10.3 Sterling 5.5 6.7 11
Product Renewal 250 Units, Thousands 2nd generation - 98 200 150 1993 FH series 3rd generation - 02 1996 VN series 100 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 12
New Heavy Duty Trucks to secure a leading position Scope New generation heavy duty trucks, FH/FM for Europe; VN/VHD for U:S. Features Quality and Reliability Driver s environment & Safety Transport economy Fuel consumption Environment, US 02 emission standards Investment In total 790 million Euro 13
Volvo Trucks in North America New VN / VHD introduction Project is running according to re-planned time lines Product launch was held in Greensboro in August Road show Drive the future tour in process Serial production starts in week 45 Focus on quality control, material supply etc Improved price and cost levels Scheduled to give exposure to 19,000 drivers; 1,500 test drives Radio Promotion 14
Volvo Trucks in North America Restructuring program follows plan Strengthening customer support system and product offering Introduction of LPA concept (Logistic Parts Agreement) Shorter lead-times for parts (as a result of combined warehouse network with Mack) Back office consolidation Winnsboro plant closure, finalized in of November ramp up with full production in Q1-2003 15
South America GDP 10,0 7,5 Consensus Forecasts 5,0 y/y change, % 2,5 0,0-2,5-5,0-7,5-10,0-12,5 96 97 98 99 00 01 02 03 Brazil GDP Argentina GDP Chile GDP Peru GDP GDP 2001 % Brazil 503,9 44% Argentina 272,6 24% Venezuela 129,2 11% Chile * 71,0 6% Peru * 54,0 5% Others 121,3 11% 1.152,0 * GDP 2000 16
Heavy Duty Market Brazil 40 Units, Thousands (heavy trucks) 30 20 10 0 91 92 93 94 95 96 97 98 99 '00 '01 '02 17
Total Market Heavy Trucks S. America Registration Forecast Units Thousands Forecast 40 35 39 35 35 36 HDV+MHDV 30 25 20 15 21 30 16 18 18 19 HDV (Long Haul ) 10 5 0 98 99 '00 '01 '02 '03 Source: Volvo Trucks; S.G., Brazil, March 11, 2002 18
Volvo do Brasil In Brazil since 1934 Pederneiras plant: 1975 (Clark Michigan) Curitiba plant: 1979 1800 employees Over 120.000 vehicles delivered Turn over 2001: 530 MUSD Invested 370 MUSD in the last 10 years 19
Product Line TRUCKS MARINE AND INDUSTRIAL POWER SYSTEMS AIR ENGINE BUSES FINANCIAL SERVICES CONSTRUCTION EQUIPMENTS 20
BOGOTA LIMA VENEZUELA PEDERNEIRAS RIO DE JANEIRO CURITIBA BUENOS AIRES Volvo Units in South America Volvo do Brazil - Curitiba-PR Truck, Bus, VCE and Financial Services Volvo Peru - Lima Truck and Bus Commercial Volvo Construction Equipment - Pederneiras-SP Manufacturing Volvo Penta - Rio de Janeiro - RJ Mack Venezuela Volvo Sudamericana - Buenos Aires Truck and Bus Commercial GM Colmotores* - Colômbia 21
Market Shares Brazil - Heavy Duty (class V) Volvo Market Share Development 35,0 30,0 25,0 GCW > 40 ton 32,5 Market Shares %, ytd Jan - September Premium range GCW > 40 ton (class V) 2002 2001 Volvo 32.5 28.5 Mercedes Benz 23.7 22.9 Scania 21.7 35.1 20,0 15,0 GVW > 15 ton 15,1 Volkswagen 9.1 3.7 Iveco 6.8 4.0 Ford 5.1 3.7 10,0 98 99 '00 '01 ytd 02 International 1.2 2.1 22
Volvo Trucks in Brazil Good performance Strong efficiency and profit improvement; positive cash flow Strong Product program No 1 in heavy duty segment Industrial capacity in place Consolidation of dealers into 13 groups Growth potential within Mercosur over a business cycle 23
Heavy Duty Market China 250 Units, Thousands (heavy trucks) 200 150 100 50 0 91 92 93 94 95 96 97 98 99 '00 '01 '02 24
Volvo Trucks Asia Activities VTC Commercial Activities Develop the Volvo brand in Asia Control a Volvo distribution system Develop a vehicle population for parts and service VTC Industrial Activities India: Volvo factory for heavy duty trucks, buses, Penta Thailand, Malaysia: CKD assembly China/CNHTC: JV (50/50) for CKD assembly of straight trucks under negotiation 25
Global Market Position challenged by Chinese manufacturers DCX 129 000 18% Volvo 117 000 16% FAW 68 000 10% Paccar 64 000 9% Dongfeng 48 000 7% MAN 46 000 7% Scania 43 000 6% Iveco 34 000 5% 0 20 000 40 000 60 000 80 000 100 000 120 000 140 000 26