Volvo Group Business Strategy is detail study of its all business vertical. Volvo is having strong brand position as a premium brand. It reflects quality products in the area of Automotive and transports solution. Volvo was only in Premium segment but to make its presence in another segment specially in budget segment, it started to acquire or alliances to capture the mass market in emerging countries also. UD, Renault became part of Volvo Truck and car business has been sold to Ford to concentrate in Commercial Vehicle business. Volvo started its operation in India as a 100% subsidiary of Volvo AB. Later on, it realized to the presence in the mass market of the country and have JV with Eicher Motors. Recently it sold its Eicher stake and make 2.4 Billion SEK.The company is having a strong hold in Light & Medium duty truck market. Company is planning to enter into Small Commercial Vehicle segment also and improving its performance in heavy-duty truck segment. In China it alliance with Dongfeng Commercial Vehicle and formed new company DFCV. Volvo acquires 45% stake in Dongfeng CV. The deal consideration amounted to RMB 5.5 billion. The Company is having a strong hold in Heavy and Medium duty truck segment in the Chinese market. It sold 62,788 units from Jan to July 2015. Chinese truck market is the largest market in the world with around 800,000 of Heavy duty segment units and Medium duty truck around 300,000 units in 2014. Recently market correction has been started which will impact on its outlook.
There are top 3 challenges for Volvo Group:
– UD, Renault Brand position and establish in new markets
– Cost reduction
– Organization structure
In Future common plateform, Drive line and parts are going to play important role for Business planning.
Volvo truck sales increased from 186,569 units in 2000 to 203,128 units in 2014.
Volvo contribute more than 50% share in 2013 & 2014.
Volvo Global Sales:After acquisition of UD and Renault brand, Volvo sales has increased. The company needs to do work on product position of UD and Renault trucks. Still, some product overlap has to rectify. UD brand is targeting to emerging countries but its entry strategy needs to be clearly defined with its awareness.
Volvo strategy is to use common Cabin, Transmission, Engine and Chassis for Eicher, UD & Dongfeng to reduce cost and TCO. Around 2,000 hybrid buses sold by Volvo. By doing proper alignment and implementation of strategy would increase its sales. Volvo brand continues keep is the brand identity as a premium vehicle manufacturer even after having UD, Renault, and JV with Eicher. After alliances or JV company kept their original brand position as it is. It targeted another customers base which does not come under Volvo names like mass or budget segment. Volvo is facing cost reduction issue. Its peers Scania and Daimler are having better ROI and Profit margin. Scania is the most profitable company in CV segment. Recently Swedish truck maker Volvo appointed Martin Lundstedt, the head of rival Volkswagen-owned Scania (Scania is having best production practice) as its chief executive replacing embattled Olof Persson who has led a sweeping efficiency drive.
UD, Eicher and Dongfeng are major players in their home countries. It is a challenge to increase their market share in respective countries. These markets are price sensitive and market dynamics are also different compared to triad markets.
Group Net Sales Heavy duty: