Volvo Group ending UD Trucks production for U.S.

The Volvo Group on Wednesday, Sept. 26, announced a new strategy that it said is an important step toward achieving its objective to improve the operating margin by 3 percentage points, including ending production of UD Trucks for the U.S. market.

“With a strong portfolio of brands, a highly competitive product offering and a new organizational structure in place, we are in a position to deliver our full potential as a company,” said Olof Persson, president and chief executive officer, at the Capital Market Day. “This is what the strategy for 2013-2015 is all about.”

Overall, the 2013-2015 strategy for the trucks business comprises 20 strategic objectives, including:
• Increasing vehicle gross profit margin per region by 3 percentage points;
• Reducing actual standard cost of sales on total cost for current offer by 10 percent;
• Decreasing wholesale selling expenses to 5 percent of sales;
• Reducing research and development cost (spending pace);
• Optimizing the brand assets to become No. 1 or 2 in combined Group Trucks heavy-duty market share; and
• Establishing a required commercial presence to support revenue growth by 50 percent across Asia-Pacific and 25 percent in Africa.

Other news included a new range of heavy-duty value trucks aimed specifically 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 being made to commence production at the Group’s plants in India and Thailand. The intention also is to produce the trucks in the Group’s Chinese joint-venture DND for the domestic market.

In Japan, the Group is implementing a cost reduction program that will reduce the cost base by 10 percent, including ending production of UD Trucks for the U.S. market, as demand in the cab-over-engine segment has declined and the regulatory costs have increased over the last few years.

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