Volvo efficiency drive goes group-wide


White-collar employees and consultants to go as truckmaker looks to improve global industrial system

September 25, 2013

Volvo Group will bear the brunt of a unified efficiency program, with the Swedish-headquartered truck manufacturer looking to save the equivalent of $666 million (SEK4 billion) a year by 2015.

The group undertook a number of three-year cost-saving efforts aimed at its truck operations exactly 12 months ago but this approach has given way to a group-wide approach.

"We are currently combining these actions into a comprehensive program, in order to provide an improved overview of both the effects and the implementation schedule of our extensive and comprehensive strategy," Volvo Group CEO Olof Persson says.

The restructuring program that is expected to cost SEK5 billion involves "both reduction of white collar employees and consultants and efficiency enhancements in the global industrial system".

How the move affects Volvo’s Australian operation is unclear at deadline as a response was awaited at deadline.

Explaining the shift in emphasis, Volvo says that the strategies established for its trucks business and other business areas last year apply to the 2013-2015 period.

"Since January, extensive work has been ongoing to identify the measures required to rationalise and enhance the efficiency of the operations within the framework of the strategies," it continues.

"In conjunction with the interim report for the second quarter of 2013, the Group announced that during the quarters ahead, it would be entering a phase in which these measures would begin to be executed."

The cost and savings of its truck sales and aftermarket network in the Europe, Middle East and Africa segment is included in the overall efficiency program.

The move comes just a week after Volvo reported a 4 per cent fall in deliveries worldwide to 12,864 vehicles in its Volvo, Mack, Renault Trucks, UD and Eicher ranges after a 3 per cent increase in July.

Last September, Volvo rolled out a 20-objective truck strategy for 2013-15.

The strategies
included moves to:

  • Increase vehicle gross profit margin per region by 3 percentage points.
  • Reduce actual standard cost of sales on total cost for current offer by 10 per cent
  • Decrease wholesale selling expenses to 5 per cent of sales
  • Reduce R&D cost (spending pace) to SEK 11.5 billion
  • IT cost on 2 per cent of Volvo Group total cost by 2015
  • Become number 1 or 2 in combined Group Trucks heavy duty market share by optimizing the brand assets
  • Establish required commercial presence to support revenue growth by 50 per cent across Asia-Pacific and 25 per cent in Africa.

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