Volvo Drops UD, Plans to Cut R&D as Part of Strategic Trucks Changes
September 25, 2012
Volvo Group announced it's making changes in its trucks strategy to achieve its goal of improving its operating margin by 3 percentage points, including ending production of UD medium-duty trucks for the U.S. market.
UD Trucks won't be available in the U.S. under a new Volvo strategic plan.
Volvo is taking approximately SEK 600 M of restructuring charges in the third quarter related to a cost reduction program in Japan and the ending of production of UD trucks for the U.S. market. Volvo says the demand in the cab-over-engine segment has declined and the regulatory costs have increased over the last few years.
Some of the other strategic objectives in Volvo's 2013-2015 strategy include:
- Increase vehicle gross profit margin per region by 3 percentage points.
- Reduce actual standard cost of sales.
- Decrease wholesale selling expenses
- Reduce R&D cost
- "Optimize brand assets" to become number 1 or 2 in combined Group Trucks heavy-duty market share.
- Establish required commercial presence to support revenue growth by 50% across Asia-Pacific and 25% in Africa.
Volvo's also announcing a new range of heavy-duty value trucks, aimed at emerging and growing markets such as Asia, South America and Africa. The new truck range will be introduced in the next few years, and preparations are currently being made to start production at Volvo Group plants in India and Thailand. The intention is also to produce the trucks in the Group's Chinese joint-venture.Related Stories:11/10/2011 - Volvo Sets Goals to Increase Operating Margin3/11/2011 - Why Low Cabovers in a Conventional-Cab Market?8/2/2010 North America Is Ready For Low-Cost Trucks, But Foreign Builders Face Challenges