Hello, everyone, and welcome to the Volvo Group Investor Update here in London. We didn't plan for this timing, but we are glad that so many of you took the chance to come to us, even that we have also big events going on in Europe, obviously. Also, for me, it's great to be back in London. I did my master's here, actually, at Imperial College London. That's the reason why I have such a brilliant accent in English. It was not a joke, actually. No, to keep it simple, that's my thing. I try to use the same accent in all languages. It's easier. Swedish and English and French and German. Nevertheless, we will not talk about that today.
We will talk about where we are heading as a group, what are the main findings for me as a new CEO since I started at 22nd of October in Volvo. It has been eight pretty intensive months, and it has been a great journey so far, really to learn to know people really from the inside. Even though that often I get the question, okay, what's the difference between your former company and Volvo? I always start by saying that I've had the pleasure to be meeting the Volvo organization for almost 25 years. In many occasions, we have been sitting on the plane back home from different markets, ending up in Copenhagen and splitting for two Swedish destinations. You win one and you lose one has normally been the conclusion.
Really, having had the opportunity to meet this company for many years has also gathered for me a lot of respect and also for me to learn a lot about our business. It's not a completely new company from that perspective, but obviously from outside in and during the eight months now, I had the chance to learn the company from the inside. When I started 22nd of October, the game plan, and that will always change, as you know, was really to start with customers out in retail operations for the different business areas to see where we are. Discuss with customers, with our different markets, what is the feeling, where are we heading, et cetera, continuously work upstreams in the company.
Obviously, when you are on garden leave for a couple of months, you also are not only playing guitar or sailing, you are also thinking a little bit about what can happen. I know that a community like you are representing or, in particular, pretty impatient that you should have been working also during that time, but you need to respect that you can do it from the outside in perspective. The good news about that is that there are, I don't think, maybe Ericsson also, but there are not too many Swedish companies where you have so many opinions. You can ask whoever, and you will have opinions. It's like asking for the opinion about the color or quality on a car. Everyone can answer that without having a clue about the answer. It's maybe even to vote for if you should be in the union or not.
The interesting part, of course, is that when you have that chance, you take the opportunity, of course, to meet a lot of external people about the company, what is happening, the views, et cetera. Interesting enough, when you after a while are a little bit more selective who to meet, et cetera, you're getting to see a pattern. You see a pattern of some of the questions where you have more or less 100% commonality in the answers or in the suggestions. Then you have a number of areas or questions where you actually meet 100 people and you have 100 different opinions. Then you say, "Okay, maybe we should look into this a little bit to see where we are and what is happening." That we have tried to do here.
One of the key events that we did after three, four months was internally to announce our strategic direction. I will come back to that in this presentation, and what does that mean. Also obviously more from an external point of view, we also announced the changes in the organization and based on a number of beliefs that we have as management and also as board. That is also something that I will come back to here. During the 8 months, I've been traveling the world extensively. I've been to all continents, and by that also had the chance to meet our partners, customers, market companies, industrial operations, et cetera. I have to say that in general, there are a number of very good things that I feel also confident to continue to leverage from, so to speak.
When it comes to the good news now where we are, it's clear we have good global positions. I mean, generally speaking, we are on a market share position that could be 15%-25% in almost all the major markets. We have also by that been building up the necessary presence, operational capability in different regions, and also when it matters, and I will come back to that, the necessary scale. Scale is, by the way, one of the most overrated words in history. It's in reality, one of the most simple to calculate on, and therefore we tend to use that in our calculations. If you use it wrongly, it will just deteriorate the company much more quickly than it will create value. There are scale that exists that we should leverage from, obviously.
We also have, in most of the region, product and service ranges that are all very competitive, confirmed by our customers, that we can continue to build on. We see also after a number of quarters now, a steady increase and a steady, so to speak, development of our profitability, where also I think that you feel that the predictability of the group is increasing also when it comes to our financial performance. People. As I said, I've had a chance to meet mainly from the Volvo Trucks, Volvo Bus, and to some extent the Volvo Penta brands, but also of course, obviously many of the other truck brands, mainly in the marketplace. I have to say, when I now have been discussing with our operations, R&D, and different functions, we have extremely committed, loyal, and motivated people.
I'm not sleeping bad at night because we don't have the right competence at all. In some areas, what we see, the drawback of it has been for four or five years of necessary restructuring activities. It has been also, to some extent, deteriorating for the motivation within the company. The loyalty and commitment and, so to speak, the dedication for our different brands are definitely there. On the flip side of all this, of course, what also has been pretty clear is that with scale, with centralization, complexity has increased. In some extent also bureaucracy, and in some cases also lack of flexibility, given the fact that we are operating in an environment that are and will continue, and in some cases even increase to be even more volatile, so to speak. Here is one of the key points to address moving forward.
We also see, here we need to look ourselves in the mirror and see, for the acquired businesses, maybe for the exception of some business lines, we have actually over time been losing market share and positioning. Here we need also to come back to the cause of that and how we can address that moving forward. When it comes to the installed fleet, only for Volvo Trucks, we have 900,000 trucks rolling out in the different markets. I personally see that we have a big untapped potential when it comes to the service business. Our industry in general are extremely hardware focused. We tend still to call it the after market, which is a funny expression in itself.
Another thing that has been pretty clear is also that given the big restructuring activities, not only the restructuring from, so to speak, after the Great Recession, but also during the growth period as from the divestment of the car group, it has been a lot of focus on structural and portfolio questions, and maybe, in my opinion and in management's opinion, less focus on the operational excellence. There is also a great potential for the group moving forward here. I was into centralization, and another thing is the clarity and transparency on profit and loss in the group. That is not only on business area level, but also when it comes to different product ranges, service ranges, geographical areas, or whatever is relevant.
As I said, as from 1st of March then, with good preparations ahead, we launched a new organization, I think that is also pretty natural after what we see here when it comes to the journey. It has been, this is clear to you, a pretty long period of growth, mainly through acquisition, geographical expansion, moving this group, excluding the core operation from a SEK 100 billion to a SEK 300 billion company up to 2010, 2011, when it dropped. Then, as I said, also a necessary, so to speak, step back. Where are we? Where do we have the overlaps? How do we get hold of the different activities? Who shall do what, et cetera.
Given that now, the cost efficiency program, as we have announced, is on track, it is more about moving into a mood of continuous improvement in all different aspects to really use and leverage the different assets that we have in this group and do it in a pragmatic day-to-day basis. I'm also pleased to say that during the transformation, it was also pretty extensive work done that I can also, to the absolute majority of that work, sign, and that was regarding the brand positioning of our different entities that we have in the group, mainly on the truck side.
It is like that, obviously, that when you have different brands, you must be extremely clear where they should operate, in what segments, applications, geographies, and maybe even harder, where they should not operate in order to not have too many or preferably not any at all drags in the system, so to speak, and I will come back to that. Brand positioning, product renewal was a big theme, as you remember, not then at least for the European system and what we call the cab over engine product range on heavy duty, both done for Volvo Trucks with the FH and FM upgrade, but also for Renault.
The big cost efficiency program that is still, so to speak, rolling according to plan, and that we will have the full comparison base as we will open the bottle of champagne in last of December 2016 compared with 2012. What we are now focusing on is really putting the next phase for the group. Customer focus is something that we will hear a lot about today and what does that mean in reality. Simplicity, I was into that. We are pursuing a decentralization with full P&L responsibility, and I'm sure that we will come back on that theme as well. Continuous improvement as the main driver for customer satisfaction and as a consequence, also profitability improvements and organic growth, and mainly then as we see it when it comes to the untapped potential on the service side, for example.
In this launch, also very pleased with the team that has been lined up now. I have in the team 10 very strong business leaders with full responsibility, five business areas on the truck side, where you have four brand organization, as you know. One that is a combination that I will revisit during this presentation when it comes to Group Trucks Asia and Joint Ventures and the rationale behind that. Also five, so to speak, non-truck business areas, but in many cases, also very linked both from an industrial and network and commercial point of view. And maybe the most obvious cross-group business area is Financial Services.
In addition to that, as you know, in order to increase the pace and speed of the operational excellence we have for the truck divisions in the industrial backbone also made three instead of two divisions where purchasing will be on the same, so to speak, operational level as manufacturing and research and development. This is a classical one because you can argue for years, if you like, whether purchasing should be in the responsibility of research and development given the very high influence when it comes to the purchasing activities already in the project phases or if it should be in operations given the continuous improvement and really the quality drive, et cetera.
The best solution is that you have three potent leaders really working side by side in the management team to drive this with the common targets and KPIs in the value chain together with the business leaders. Okay. That is a little bit on that starting up, so to speak, where we are. I took the time to write a little bit of a manuscript, so maybe we should follow that as well. We are well invested, as you can see here. I think everyone can certainly agree that the group is well invested and has been for many years. When it comes to leading brands and products for each segment, I should at least say for the time being, brands and products for each segment.
The good news is that the majority of the segments we also have leading brands, but we also have a number of positions that we must improve or scrutinize and take decisions upon, basically. Still, with the brand portfolio we have in the different business areas, we do not have any excuses not to perform with the right market position. We have a very modern industrial footprint. We have a capacity level that we can keep for a number of years is my estimation, and also that the operational part of the group has conducted a very intensive activity when it comes to restructuring, really addressing overcapacity during the last two, three years and successfully so.
That means now that we have the platform globally, but also even more important regionally to really be more flexible and agile and to correspond to the volatility that we can see in the market. When we look at the customer satisfaction loyalty retention level, that is also a score that we are happy to see as a start. You can always improve obviously, but generally speaking for our different brands, for our different regions, we have a high loyalty satisfaction and if something we have been investing to protect that also when we have had problems, for example, with quality. The protection of the customer, to really be close to the customer, has been there in some cases to the expense also of our own development and profitability.
I think that's the right priority to do it. It's about really making your own internal processes even more robust and quality-focused. Competitive technology platforms, I will come back what that means. Component by component, product line by product line, that has been the case for quite some time. What we are doing now is that we are much more extensively focusing on how do we get that together in a smart way, in what we call the CAST system. This is a major backbone for our way forward. The CAST system stands for Common Architecture Shared Technology, and that is the modular thinking of the group when it come into, in a smart way, sharing technologies, components, and systems without so to speak, affecting the brands or the ability to tailor-make solutions to the specific need. Network.
By the way, interesting distribution that is also part of the DNA is like aftermarket. We are distributing products. Many businesses do that. Some has moved forward in selling, et cetera, but global distribution and presence, and that's true, a very strong network. We see that both when it comes to our captive network that we are running, so to speak, through the brands, owned by the Volvo Group or by the brands. Also when it comes to our private investors that are high-performing and are doing a great job. Also in that perspective, we have a very good starting point for this next phase. I will come back a little bit to that as well. You can also see it like this. We are well-invested, and has been so for many years.
As you can see, for almost now 15 years, we have been running on an average level of 130% CapEx in relation to depreciation. That is, of course, not a sustainable situation. That is pointing towards one thing that is very clear. It has been geared for growth, and in particular, unit growth. In reality, that unit growth has not been showing up at the same speed as the investments. Two takes for me on this one. First take is that we are spending too much. Second take that is also very important is that this is one of the confidence matters when we are talking to investors and the financial community and our owners.
How can we actually show now that we are coming back to the level that we should be for quite some years, and that is on par with the depreciation at maximum. At the same time, drive also the investment focus where it matters. We have a number of very important crossroads to take when it comes to technology and innovation and make sure that the group is actually redirecting also the funds for future investment into these areas moving forward. Here we have a number of issues. You see now after the last product upgrade, we are coming back, and that we are not tempted to do things but to stay with our plan, organic growth, continuous improvement, use what we have, and really leverage the investments that I also showed in this slide. 100% doesn't mean nothing. It means quite some money.
Even with that, we need to be very clear on how we actually are, as I said, making priority on different funds. Obviously, when it comes to the industrial system, the major restructuring we can host now growth. We can host the right type of measures to keep flexibility for the volatile markets. We can host, so to speak, intra-plant shipments, and we can host also new launches coming into the different regions and brands. If you look a little bit on, this is, as you remember, a slide that we showed one year ago, or a little bit more than one year ago in Ghent, where we are starting to disclose a little bit about the performance for the different brands and the different regions. If anything, what we can see is that we are continuing to develop in the right direction.
What we are happy to see is that North America, even though it was a tough year when it comes to the start of the correction, North America performed well. Performed well thanks to both an increased, so to speak, penetration of powertrains everyone is aware of, and also pulling for better, even that big part of that potential is still to come. Also that we are better now when it comes to the managing volatility. Maybe even more important that we have the guts to even lose a little bit of market share in a downturn rather than to stay with a big inventory that you have to pay for another time again. With the inventory reduction, so to speak. If anything in downturn, make an estimate and then take it down the double. It's a good rule of thumb.
That is also very hard to do, but generally speaking, I've not seen any situation where you have ended up with a dry inventory, so to speak. I think that this is one of the key factors. South America, obviously deteriorating. At the same time, what I have to say is that given the very high speed of the correction and also the magnitude, the organization in Latin America is managing this in a good way. Also obviously, Europe is, even if it's the same colors here, we see that we have an improvement for the two main brands given also the uptick in volumes and the better absorption rate and also that we are gaining momentum in Southern Europe.
Also, one big explanation for this is also that the operational restructuring that has been made is kicking in gradually, and we can see that in the right type of allocation for the different brands. There is more to do when it comes to operational daily activities, and it's more to do when it comes to the market as such, not at least than for Renault. Asia, obviously one of the major priorities here is the Japanese market. I will come back to that. You can see also for Africa, Oceania, with high volatility, there has been still room for improvement. Generally speaking, we are following this obviously not only on this level, but country by country, segment by segment. As a consequence also, we have been taking decisions that you cannot see in this slide.
One example is that we have now been pulling out from South America for Renault, since we are not seeing any probable opportunities to succeed in the long run. Then it's better to call a spade for a spade and concentrate where you have the opportunities to succeed, so to speak. Before then coming into the seven strategic priorities, just to take a step back and say, why the Volvo Group? Why do we have a future that we believe in? From time to time, of course, we discuss that also, if we should have this slide together with you guys. We said, we think that it could be appreciated because personally, I'm a culture-driven guy. I believe that if you have a strong culture in a company, you will succeed.
It takes a hell of a lot of job to do it, but to really have the right culture will make the whole difference. To put up targets is easy, but that will not change, so to speak, the behavior and the real performance underlying. The good news for Volvo is that we are actually in a sector that has the future. Is still a very important sector, but has even more of the future in front of us. If anything, when it comes to the global challenges, logistics will play a super important role.
If you think about the CO2 and the environmental challenges that we have, if you think about urbanization that is coming big time, if you are thinking about the clear correlation between GDP development and logistics and a number of other factors like energy supply and energy security and geopolitical consequences, the logistical sector is one of the main drivers. Normally when I'm out on different, not very frequently today, but try to participate from time to time, it could be a panel. Then there are some guys representing the new economy. I happen to be on the old economy, which is fun in itself. Since we are also addressing a very. Take Facebook, for example, which is a great company, by the way. They are addressing two very basic human needs, communication and self-fulfillment.
We are actually addressing one of the most important basic needs, and that is mobility of goods and people. We will do it in the most sustainable way. We know that this is driving prosperity for real. The good news with the word prosperity is that it's embracing every starting point. Even if we're talking about Southern India, how can we really drive that development in Southern India when it comes to the starting point of that transport solutions and transport equipment? Or how can we do it in central Stockholm and Gothenburg when it comes to total CO2 fossil free big systems? Or in a mine where, of course, that will come more and more, et cetera. Really, driving prosperity through transport solutions will make a difference. It will much more point to the solution than to only the product.
How do we actually do it, we combine the different assets that we have as a solution provider and not only say to the major in London, "Here you have a bus, good luck, and see you next time you want to buy a couple of buses." Really to drive, so to speak, the system. On the aspirations part is having leading customer satisfaction for all brands in their segments. If we cannot do that, we should not keep it. I think this is a very important part of the pyramid. This is also to embrace our different business areas and brands and say, if we can pull out what is good to be part of the Volvo Group, then we should do it and develop it, and continue to develop it because we see that it's hosted in the right way.
If we don't feel that, it's not fair. It's not fair to the brand, to the people working for the brand, and for the customers. To have leading customer satisfaction for all brands in their segments is a promise that we should achieve. Otherwise, we are not the right, so to speak, context to operate within. Obviously when it comes to the two other stakeholders, the most admired employer in our industry is the want to. Everything for me is about the pull, the want to. That release of the force among human beings is the whole difference. If you take a dealership and another dealership, you have the same product range, the same type of economy, the same, and you have 10% and 18%. That is how it is. People matters.
That is an underrated part when we always are discussing about companies. When we are trying to put it into the Excel sheets and say, "Okay, what will happen here?" Having industry-leading profitability, I think that is better also when I come to London and discuss with you guys because that obviously is creating maneuverability. The values here are deliberately created so we can see, okay, what is the interconnection for us as people? It starts with money is not falling down from heaven. Customers must be happy. If they are not happy, they will not buy. If they are happy, they will buy, they will be successful, they will buy more. That logic is how it is in a B2B sector. Customer success in a B2B operation is really starting, of course, with the hardware.
The real name of the game is 10, 15 years of operation with first, second, and third owner. Be close to them in the whole value chain, by the way, all the way from R&D, from operations, parts supply, and the retail. How do we do that in a big company? I normally say that I want a Volvo Group that is a conglomerate of small companies. Everyone should feel that they can use and operate in an ecosystem where scale matters we should have it, and where scale doesn't matter, just take it away. That is based on trust. Trust doesn't come for free. It takes a lot of time. You need to work with it. Passion change comes based on trust. Passion. We discussed it a lot.
You can just imagine a group like Volvo that is going through so many changes already since 2010. Again, we say, "Okay, how shall we do with North America? Do we need to change?" Yeah. Everything we need to change all the time. But how we change is the game changer. Eventually we come to performance, and I will come back to the performance later on here. Very important for us. We have been working hard with it. What does it mean for us? How do we create this culture? Do we believe that we are building prosperity through transport solutions? Do we believe that that will bring performance for our customers, for us as company, and eventually for our shareholders? We are absolutely convinced here. Based on that, we said, how many priorities can you have in the Executive Board? 25, maybe.
42, also a possible figure. We picked seven that we say, those are our seven priorities that we should be able to follow and execute on in a good way in the Executive Board in the Group Management. We launched them also internally in February, and since then we have obviously been working hard in the different areas to make sure that we have ownership in different parts of the organization where they are belonging. You can put it simple to say that number 1 to 4 is mainly based on the what and 5 to 7 on how to do it. Number 1, obviously, it is no secret that we are winning and losing overall with our truck business. That is not only saying that the other businesses are less relevant. Absolutely not.
Without a sound truck business, we will also actually have a negative drag when it comes to our other business areas. Therefore, number 1, reinforce Volvo as a global premium heavy-duty truck brand is the number 1 priority. In a big group, things can be taken for granted, but the premium brands are not standing still, as you know. This is like standing in, what is it? Escalator backwards. If you're standing still, you're moving backwards. You just need to move in a sense to just keep the same position. The Volvo truck brand to have the highest priority and to make sure, and at the same time, make sure that we are regaining and taking back the relevant position for our other three brands in the high-end truck market.
Number 2, capture Asia growth through the JVs and the value truck development that we have been doing. Number 3, create the most desirable heavy-duty product and service portfolio. Also important to say that we make sure that in this portfolio, through the core system, that we really can tailor-made to target different segments. Volvo Production System and production is not production, only production operations, but production of all different type of products and services. Volvo Production System as the platform and the culture, so to speak, leverage. Establish brand-specific sales and service operations with focus on retail excellence as we have done now when we have re-established the brands with full P&L. Leverage group assets in our non-truck business areas where it matters, creating additional profits, I will come back to how we are doing that.
Revitalize the Volvo Group culture as I was into, and I will also come back to that with some examples moving forward here. First one here, reinforce Volvo as a global premium and are also really regain position for our other brands. The name of the game here is really this simplified but still very important slide. It starts and ends with a customer that want to have a solution. For whatever brand, and that's the reason why I don't like when we are writing, okay, one brand is here and one brand is here, et cetera. For a customer, they are always choosing what they believe is right. Even if this is a B2B with a heart, which makes it fun, by the way, it is also, at the end of the day, a very rational business.
It's production equipment we're selling, it's a life cycle perspective, even when we are talking about the value segments, such as in China, in India, in Southeast Asia or in Africa, people are extremely rational when they are doing their choice. This is just to show that depending on what type of application, what type of segment, what type of customer size, what type of geography you're operating, you will have a cost short that is varying a lot. The long-term ability to tailor-made a solution for these different needs will make the whole difference. The interesting part, if you look at the different brands in Europe, that there are different ways to heaven here.
I'm personally convinced, and we have been looking through that also now when we are designing our P&L organizations or business areas, that we have very clear space and position, for example, in Europe for both Renault Trucks and Volvo Trucks, and can leverage, so to speak, a smart backend. At the same time, give the customer experience that they expect and require in order to be profitable. Just have this in mind. It's not one size fits all. It is really about understanding the customer's business. By the way, this is only the cost side of the P&L for the customer. Increasingly important, what we see is the revenue side, when they are also getting different type of incentives when it comes to CO2 efficiency, when it comes to noise efficiency, when it comes to other type of discussions with their customers.
We have a more active part of that as well. You can go into whatever homepage you like among the big retail chains today, the big activity that they have to conduct in order to achieve their CO2 targets, for example, is about logistics. There also, our customers have a good opportunity to be part of a positive development. When we look through then, the truck brands and what this means is that for Volvo Trucks, obviously, we have a strong position. We are a global brand, the only global brand in the world, as you know. In most of the markets, we today have a strong position, maybe to some extent with the exception of North America, where we are working hard. I think we are gradually improving both image position and also network and product footprint.
This is a strong focus for the Volvo brand. We also see that the traditional, so to speak, stronghold is in long haulage and high demanding long haulage, but still under absorption with great potential in many of the other sectors, such as construction and distribution. Also, as I said, the untapped potential in the service business and also network consistency that we have, generally speaking, a good service and sales network, but still a number of underperformance that we need to address. Maybe the drawback of Volvo is that, as I said, a little bit when you had the multi-brand structure, it has been taking a little bit for granted. Now moving back to a pure 100% focus on Volvo Trucks will of course make a difference in that perspective.
For Renault Trucks, first of all, one of the key decisions that we have been taking for Renault Trucks is, 1, sell what you have, and 2, develop where you are strong. Exit where you are not strong, basically. It will be focused on Europe, it will be focused on Southern and Eastern Europe, but also that we are having a good coverage of the services since we have trans-European movements. It will be focused on North Africa and Middle East, generally speaking. The interesting part of that is that someone might ask, okay, will you have scale enough? Now we are coming to scale. Yes, the answer is yes.
The answer is yes because scale when it comes to markets is about market area by market area where you need to be 10%-15% to have relevant scale, and to be able to really develop, so to speak, the sales and service network and have the right presence. The scale when it comes to manufacturing, I think it goes without saying we have one plant for final assembly that is well geared for the volumes, and that is Bourg-en-Bresse. We have one combined plant now when it comes to medium duty, which is also good since it's not brand sensitive in the same way as heavy duty, and that is Blainville, when we moved down Volvo to Blainville.
Obviously we have scale also when it comes to technology in a smart way with a CAST system, even though that is something that we admit also, that we over-engineered the renewal a little bit, and we are addressing that now. The good news about that is that we have a good platform to stand for many years to come now, and we can really leverage that also directing the right type of customers with a broad range. We have a great team also very dedicated to work on this now. Other factors to really work on is to show that we have a very strong product, and also that should consequently continue to improve the RV and thereby also the offset for the new prices.
A third part I just would like to mention and can come back to that also in the Q&A is really the medium-duty ability within Renault Trucks when we are getting back, so to speak, to the strongholds. Again, good case when you really carve it out and see where do you have the strongholds, how can you use the group assets in a smart way, but not overlap the brand from a group perspective. We also see that trend in the Renault Trucks business area as we go today now. On the Mack side, the same thing here. Continue to develop the core markets, and the core segments. As you know, almost a 50% share in refuse or waste handling in U.S., that is obviously also important, still small market, but important market with interesting profitability.
We have also the straight trucks, vocational construction, and other type of special trucks, a very strong position, market leader with 23%. That will, by the way, continue to withstand with also construction activities in U.S. Also a relatively strong position in regional haul, where of also future product investments also can gradually increase opportunities for some smart niche opportunities in the long haul where we are only present with 2%. Given the cost system and in a smart way, because Mack is the iconic brand in U.S. Mack built America, we should continue to leverage on that. We have a strong and dedicated network also. The good news about the U.S. is also that we see that our investors in the retail are gradually seeing the opportunities when in the big urban areas to separate the networks and gain market share.
UD Trucks, obviously, as you know, a story of major restructurings since quite some years now. Also in this case, we see good improvements coming out from that. Restructurings in terms of the industrial footprint, some restructurings when it comes to the sales and service network, and obviously also that we are getting our act together when it comes to the product range. Light duty, marginal business, but we are running that through an OEM contract as a vendor and badged business, which is getting a good contribution for us. We have taken that decision to do the same thing for the loss-making medium duty. We will as from 2017, have that as an OEM sourced product. That will be great also to support the network and the customer base that appreciate to work with one supplier from that perspective.
We will continue now to also invest for competitiveness in the heavy duty, also in a very selective way using the cost system. Here I think we have a very focused activity. In addition to that, we have done a more full carve-out of the industrial value chain together with the commercial system for UD Trucks. That is to create, so to speak, an agile, lean company, where we can really see how much R&D can we afford, how much can you pull from the group, and how do you dimension the structure for the market shares that we have and the volumes that we have in Japan and in selected export markets. Joachim Rosenberg has been sorting off with the team in a very good way. Number two here is Asia, that is obviously also one of the big questions.
As you know, we are Before coming in maybe to this, we are invested in Asia with two bigger joint ventures in India and in China. We also have our own, so to speak, value range with UD Quester. One thing that is important to remember here, you remember, as I said, that customers are rational. They're extremely rational. When you look both on this cost pie here, it means that there are a number of reason why it looks like this, and why customers from that perspective or cash flow based investment focus, where they say, okay, even if I can, in a theoretical way, calculate that the life cycle cost will be lower to buy, for example, a Volvo that will last 10, 12 years. They don't either have the trust or horizon to look 10, 12 years down the road.
They say, "Okay, can I get it back in 2, 3 years' time?" Another very important factor, of course, is the average mileage. Here you are running 50,000, 60,000 kilometers in many of the applications still, where in a comparison segment in Europe or in U.S., you are at 250,000 kilometers. Only from that side, of course, uptime doesn't matter at the same time. Fuel will not have the same role in relation to the depreciation, et cetera. Obviously, other factors like interest rates or driver costs are completely different. The SEK 1 billion or even SEK 100 billion question is how fast will different things go here? There are already signs where segments like e-commerce, for example, in China, we are up now at 200,000, 220,000 kilometers per year.
There we see that Volvo Trucks, for example, as a brand, has a leading position now because then, again, customers are rational. The fuel consumption, the uptime, the repairs, et cetera, and how fast. Our assumption is that for India, China, and for Southeast Asia, it will still be quite many years where this type of offering is needed and where we have a golden opportunity to meet that with the cluster of the JVs and our value track, depending on region and how we can use the different brands here. What we have done is that we have created the fifth business area for trucks that are combining our interest in Volvo, VE Commercial Vehicles and in Dongfeng Commercial Vehicles. Also together then with our value offering that is mainly then targeted for Southeast Asia.
That we see now that we are starting off after a pretty tough start, both when it comes to quality and acceptance. Now when we have targeted a number of key markets, we have a good acceptance. As you can see, we just took a number of snapshots. Even if it sounds small figures yet from Thailand from 2.2%-4% and Indonesia from 6%-15%, those are important signs. We have said, don't grow quick now. Grow sustainable, get the right price point. We have the right investments. We should not have this as a drag. We should build our position in the value segment.
We should continue to bring the different competencies to the table from the JVs together with our, if I may say so, people that are experts in the value segment, and work on where can we use, so to speak, networks together. That not mainly the different brands here. If, for example, if we have a good network for Volvo Trucks here, it's much less risk than, for example, in Europe because there are complementing segments where we actually can have an additional offering. If we don't have that, we are not there at all, and we will not have that deal at all. We see how well that is working when we have good complementary offerings, such as Australia, where we have three different brands and really complementing each other, and we have a market share of 27%.
Purchasing and supply chain, obviously also here, we are carving out these parts so we know, but still based on the cost system with the standardized interfaces. That we actually can have local supply of main components where so matters and build the right type of life cycle expectations, but also have the ability to, in a smart way, upgrade when those times are coming. Technology components as I was into. This is a setup that we believe in. We have had good discussions, and we also see that also in our joint ventures that we have good traction. The main concern for us on Volvo Eicher Commercial Vehicles has not been the earnings, even if it can always be better, obviously, but it has been the traction in heavy duty.
Since six, seven months now, with a lot of, so to speak, dedication from our Indian organization, we see also traction in the heavy duty. Here you see 3.7%, 2015. Year to date, we are around 5%-6%. In the regions where we really concentrated on heavy duty, we are above 10%. That, if you remember, I said is the critical mass. It sounds great. Also on Dongfeng Commercial Vehicles, we have been managing together also the downturn and also in a successful way. What will happen here, of course, is that some drivers will come from emission and legislation. That is a very important part also of the logic. CN V, that is Euro V for China, come soon, and then almost directly after CN VI that is Euro VI where our knowledge and support is an important contribution.
At the same time, where we can use a small carry back also from this structure. When it comes to the product and service portfolio, everything is my favorite subject because I love truck business, but one very important part is the cost system, as I said. This is something that we can talk about the whole Capital Markets Day, by the way. This is just an investor update, so you have to wait a little bit. The importance of this, and for you who were at the Ghent update or Ghent Capital Markets Day, it was more or less the same slide. We have changed a little bit, and one thing that we changed is the direction of this. Before it was in this direction, and this has a huge difference because it starts here.
If you create a system here that is not meeting the expectations here, it is useless. It could be brilliant from an engineering perspective and you can combine whatever. If it erodes the brands and you are not getting the effects out of it when it comes to price positioning, segment, performance or geographical acceptance, just forget about it. The important part is to really look through what are the needs from the different business areas and where can you combine it. Obviously, there are a number of main components. There are a number of main enablers when it comes to the main interfaces in the definition of the hardware, but also increasingly important in the software. Electrical, electronics, mechatronics, et cetera. As a consequence, given that, it starts and ends with the specific need of the different customers.
You can also then leverage the right type of scale. The right type of scale, basically then is in the industrial structure as we have been talking about. We see that coming through more and more now in powertrain. That has been a consistent red thread through the Group's history since we started the different type of acquisitions. How we are working with the production flows and where it matters with common processes, not least continuous improvement and sharing. At the same time, be very clear about that we should not have one size fits all when it comes to the industrial setups. Depending on wages, depending on volumes, et cetera. We are not overinvesting and ending up with 130% in relation to depreciation.
This is the base and what I have seen the last. I have been following this now with R&D team, and I think this is important. I think we are gaining momentum here in a better pace than I expected, actually, when I entered. I think coming into a more normal situation without restructuring, very important part of the continuous improvement, work with the cost system and work with continuous introductions rather than big bang solutions. Super important. Also important to say, to use the Common Architecture Shared Technology where it matters. This is the difference between standardization and modularization. We are not being too tempted to share too much. That has a very important part for the brand uniqueness or for the competitor offering for that specific brand in their specific market and application.
Therefore, again, as we said, it starts and ends with having a smart view on where are we sharing, how much, how many brands are into that. This we are steering together with the business area management and also the R&D executives in the product board. It is a pool situation because every brand is responsible for their P&L. At the same time, it is also a guardian situation. We are not developing things that have the same need and then we don't need two different executions, basically. Also very important principle for the governance and not least for investments and not to over-engineer things that do not matter for the customer. Something more to say about that? No, I think I go through with that.
What are the consequences then for us when we have a core system now that is getting operational to a much higher degree with the new product renewals? The major things for us is that instead of different product lines, you need to introduce a full range product at the same time, big bang. You can work with continuous introductions step by step. When you have a new feature or a gearbox or a software or a cab feature or connectivity or electro-mobility, you can introduce it on the different product ranges as we go. You can de-bundle large product into several. Because large projects are, in theory, cheaper, more efficient. It's like a big factory or in theory much cheaper and more efficient than a small factory. But in reality, it brings pretty much of dependence and complexity. You can de-bundle large product into several.
That gives also much more empowerment to the engineering teams and a bigger proportions of the engineers to see their delivery into the CAST. Really that it has brought something to the market. You can do continuous improvement, obviously. So that is bringing improved product quality, more stable workload, as we said, less project complexity because with large project scale, complexity is increasing, and less risk also, and people empowerment, as we've said. So the CAST system, very important key parameter for us to continue to work with. Also important is, as I said, with the R&D funding going forward, that we are making sure that we are also putting our bets where it matters when it comes to future innovation and where customers really want to see development. We have today a world-leading situation in these three areas.
We have been not so noisy about it, maybe a little bit shy, actually. I think as we move forward, we will prove by implementing together with customers, let customers be even more part of our innovation process. When it comes to alternative drivelines and fuels obviously is alternatives to diesel. If it's biogas or ethanol or different type of alternative fuels, we are there as long as we can see a long horizon and when economic and technical horizon is going together, we have that knowledge. But even more important, what we see is the combination with electro-mobility. That is where we have put most of our bets, and we have a clear leading position.
Everything from mild hybrids to heavy hybrids and also to full electro-mobility, as you know, when we are now deploying more and more orders into Europe, to start with on the public transport side of buses with very good results. Obviously all these combinations will come more and more in different type of applications. It will start with these type of more confined areas, like cities, like mines, type of areas where you can control infrastructure-wise, but it will come more and more also in different combinations. When it comes to independent electro-mobility, we are happy to see that we have a strong position. We are continuing to invest, not losing out there. Automation, we showed a small film. That is also a given to come. In our industry, even more clear that it will come quicker.
We are already today conducting full-scale tests in confined areas, obviously like a mine. It's nothing new about it, and you can also do it semi-automatic if you like. When you have clear guidance into the routes, you do it full automatic, and you can have also control tower with the type of systems we have, both for trucks and also for yellow machinery. Connected products, more than 500,000 Internet of Things this year today. What we're using it for, as you know, is to drive information to the customers, but also to drive information to make our other type of services more efficient, remote downloading, remote diagnostics, repair and maintenance, finance, insurance, et cetera. Still, there is room for improvement here to increase the ecosystem with other players. Also the industry is surprisingly keen on data gathering.
The two other steps of action and analysis is even more important. Volvo Production System. One thing that I've been observing during my eight months is that we have, for a long time, been trying to solve operational drawbacks with portfolio answers, or even in some cases with strategic answers. We are now with a new operating model, making sure that we have a clear focus on operational excellence when that is the need. There is a need in many areas to really drive continuous improvement, lead times, precision, quality levels, improvement work, and use the competence of the people. This has been a clear observation for us. It's also on the portfolio level that we have a clear governance also how we are actually pruning the portfolio in a smart and consistent way, so we are not letting draggers be kept in the structure.
It is about, as I said, now moving from big programs, restructurings, into continuous improvement, and the leverage out of that is something that we have big confidence in. The Volvo Production System is really about the flow thinking, same KPIs through the whole value chain, reinforce the regional structures because we have strong regional value chains that can operate with good flexibility and volatility. I think we have been showing that now in North America, for example, also in Brazil and in Russia, and all over the place, by the way, to really give this agility and flexibility in production volumes. This is one of the key factors for us. We believe that here is a lot of opportunities, and we have already started to see those effects. Variant reduction.
We have, as always, it's easy to introduce new things, but you also must be brave enough to take away products or product lines with low volumes and with almost no contribution when it comes to the lost sold unit, et cetera. Continuous introductions as I was into. Cost and Volvo Production System as a platform, minimizing risks and really driving productivity and efficiency in the right way, in a sustainable way over a long time. Quality is the best way of doing efficiency. This focus, we are working a lot with very positive feedback also from our people. As I said also, that we have a brand and regionalized value chains that we can utilize for decentralizing our decision-making. Establishing brand specific sales operation. Just a number of words on it. Why are we doing it? Customers, they live and die with their brand.
That is how it is. They love it, and they really want to have that peace of mind, trust. It's about product services, it's about people, it's about the network. Customer loyalty starts in retail. This is really from corporate to a customer-focused culture. I've been spending a lot of time just visiting our different retail operations. We are going through together where we are, what is the volatility in performance? Why do we have different levels of performance and also very good feedback from the organization. Here, the best thing with retail is that we have so many interesting positions. Also for young people coming up pretty early in their career that can run a full-fledged P&L. What can be more fun than to sit as a group manager or department manager or whatever? Here you're running your own company, and you can really make a difference.
It's fantastic. As we say in Sweden, from that's a local one. It starts in retail, and the retail focus is extremely important to have a grip on. Thereby also, and you saw that also for quarter one, we are starting to disclose also how we are doing in the service side. To be more transparent to you guys, but also to put focus and pressure on the downtime potential that we have. We are still, as you can see, we have approximately 23% of the services today, where of the majority is parts, and pretty natural due to the integration of the network that we have.
At the same time, when we look at some of the markets, there is room for improvement here, and we are working hard as one of the missions for the different business areas to have clear business leaders and targets on the service side that will further improve and increase resilience, and that we take step by step as we go here. Already coming up as best in class, we have a number of percentage points when it comes to turnover, and I don't think it's a big secret that it has a pretty good profit contribution as well. This is a slide that I'm using from time to time, good or bad. Maybe it's bad, I don't know. I've done it myself. It was for free anyhow, so don't worry about the cost there.
If you think about, the reason why I want to show it is because, this one, vehicles or machine, whatever, let's say that this is 18% here. That we know exactly. We know everything about it. 18.1, 2, 3, 4, 8%. How does it look like, et cetera. As we go here, and that is the starting point for what we have for the services. Then when we say, okay, we have 50%-60% on parts, in reality of the total market, what we have is, if we have 60% here, and then we have 9% of the total market in parts, and still 40% to go with the loyalty here. The same you can see then for the different products and services. Two messages that we have been very clear about. Do we have the right amount of services in our portfolio?
Given that we have them, do we perform on them, or do we just have a number of services that looks good? When I see the best product and service and solution related companies, they don't have a super big portfolio here, but they are really good in driving penetration of the installed fleet. This is one of the areas that we are working together with. If you pull this, market share matters, therefore we need also to see, okay, where can we grow? Market share matters when it comes to different type of segments also. You have a completely different picture when it looks at construction, mining, or if you look at long haulage, or if you look at the tulip transport in the Netherlands, whatever. Again, a number of things.
Bundled services that we do with connectivity like repair and maintenance contract, they are pulling the two things here. From a perspective of discussing the potential, there is a lot of interesting facts in this way of working actually. One of the favorite subjects among investors, obviously, our different business areas and what is happening, et cetera. Just to be clear here, when you have a number of different business areas, may it be truck or non-truck. As I said from the start, everyone shall be benefiting from the fact that being part of the Volvo Group. Otherwise, it doesn't matter. Otherwise, it's even worse. It is actually unfair both to the brands that are benefiting or the business areas that are benefiting and the ones that are not. We have two very clear principles.
Principle one, every brand or business area or geography or product line or services shall deliver on their growth and profitability and volume targets based on its own merits. Principle number two, every brand pull and not push is responsible in a smart way to pull whatever is good for their business out from, so to speak, the group of opportunities. If that is customer or dealers that we can combine in a smart way, or if that is powertrain technology or electro-mobility or connectivity or knowledge and talent or brand, that's fine. At the end of the day, I will look together with John and the executive board and say, if we don't see too much of things that are combined because there is no idea, why should it be part of it?
I think that is the best way of reasoning instead of trying to explain, probably it could be good with this so that let the different brands be clear on how can they use it. That is the way we are working right now. Finally, coming back to the culture. I will just make a word on performance that is based on what I just said. This is how we are actually pruning the different type of portfolios right now. We have a starting point that is clear for our business areas. We are in a way where we have it on regions and where we have it in some cases on countries. We have it on product lines when it comes to the main product lines, et cetera.
We are now continuing through our business areas and their P&Ls to go through that on an even more granular level. What this will show is that I and management, we want to see on relevant levels, how does it look like? Where actually green or is it gray? It's just to match the suit here. That means that, okay, we have a good position, continue to develop, drive it. If it's profitable growth, penetration, whatever. It is, so to speak, a decentralized responsibility. We don't need to be part of it, if I may put it like that. Yellow means that we want on a certain level of organization to see action plans with high-frequency execution coming through, meaning that it's on the observation list. Either it could be that it's an early launch to see are volumes coming accordingly, as we have said.
Because also in these cases, patience could be pretty limited. Are there long-term drags that we say eventually it will come, et cetera. Honestly speaking, there are a number of red dots that we know and we have been working on for a while. I think you are aware of, as I said, for example, the medium duty in the UD platform. It's not an exit, but it was a decision to exit it as an industrial platform for us and to bring in an OEM complementary. I think it's a great decision. The backhoe loaders and the graders, et cetera, are other examples where the probability and the motivation to really develop it was not there. It was not a business case. We couldn't see it. We didn't have the platform. Exit it, sell it, whatever.
For the yellow, as I said, have a very clear time period when, so to speak, delivery shall come. What we want to achieve, I hope I've been reasonably clear about that. Clear leadership and profit and loss responsibility for each brand and business area with this structure. Also not only brand, because we are talking about big companies. Volvo Trucks is, as you know well above SEK 100 billion in turnover. That is a big company in itself, and that means that we'll continue to do that on regions and geographies and industrial footprints. That we are really making it from corporate to customer culture. We are in a good way. We have a well-received atmosphere in the company. More regionalized value chain approach. We have those investments, leverage on it to make a continuous improvement, increase simplicity, and improve speed.
Ladies and gentlemen, I was almost saying dear friends, but it depends on the question. I will say that at the final, I understand. Thank you very much. I think we open up with Q&A for that.
Hi. Claes from Citi. You list six potential exits on one of the last slides. Could you, Martin, give us some color on the share of revenues? Some companies in this sector, such as Siemens, are talking about ex-billion being sort of underperforming. If you could do that, it would help.
No, I think it's a little bit early. It was more of a schematic way of looking upon it, actually. No, I will not do that as we stand for the time being. It's more about the principle, how we are working with this, so to speak.
Just to clarify, was that a sort of a unit when you said volume, or was that in SEK? Just to clarify that.
It could be whatever, actually.
Could be a big difference.
Yeah. The important thing is depending on what type of focus area we have. You can imagine this as being, for example, Volvo Trucks. Volvo Trucks are looking through the different markets, or they are looking through their different applications for truck configurations, and then you get the picture like this. The good news about having the same methodology and also have the same way of looking upon high performers and good decentralization, full steam ahead, yellow, limited patience, and red exit. I think that is bringing a good culture in the company that we need now when we have more of a continuous improvement, transparency, P&L focus in the organization. It's more the methodology. This could be whatever level, so to speak, but we want to see the transparency, even customers eventually.
My next question is on cost. You said that you're positively surprised since you joined. How much of manufacturing right now delivers productivity in line with best in class? I know Ghent is doing quite well, Skövde as well up in Sweden. Is it 20%? How quickly can we roll out fishbone module manufacturing in the rest?
I think to start with, cost is a good enabler to share, so to speak, the same interfaces, way of working, et cetera. When it comes to world-class manufacturing, it's more the maturity level when it comes to our way of working in Volvo Production System. Also there I have to say, and as you're indicating also, there is still a wide spread, but definitely also given the fact that the operational part of the group has been going through an enormous amount of restructurings, closing, opening of new areas, both when it comes to the logistical part, the manufacturing part, the machining part. I'm proud to see that we have the number of plants and also sub-plants within the main plants that are on really high level, but still room for a lot of potential.
My final question is on this observation list. I know that all yellow circles are not on the observation list, in terms of what kind of timeline are you thinking here in terms of giving them a chance?
I think it depends a little bit on what type of dot you have there. Are you, for example, early in the product cycle? I can be clear. Obviously, when it comes to the full Asian segment, for example, we have a number of products in the portfolio. Since we also have been conducting a number of acquisitions during the same period as we have been launching product, that we will have maybe one year to see, okay, is this taking off with respect to go for a more focused strategy since we have some overlaps, for example. It can be everything from six, seven months to, depending on if you have a little bit more, it could be up to a couple of years maybe.
The important thing is that it should be very clear what are we expecting, and that also if you have a timeline that is longer, depending on investment or whatever, that we will not read it after two years and say, okay, what happened? We will still continue to read it every second week, whatever is necessary, because long term consists of many short term.
Thank you.
Björn, Danske Bank. You sound kind of optimistic on potential in terms of profitability and growth looking ahead. If you look backwards, how much do you think Volvo has underperformed versus its capacity and versus its peers in the past?
This is a super difficult question given the fact that different companies and entities have conducted completely different strategies of being where they are today, so to speak. Since that has been a story of a lot of acquisitions, it has therefore also been a little bit blurred about what is what here. I think one of the main takes we are doing now is that we want to make sure that everyone and everywhere things are standing on its own, so to speak, profitability and commercial merits, more focused on profitable growth than growth and organic growth rather than acquisition. I think we have reached a level where we have, so to speak, the size necessary to do almost whatever is good for our customers, so to speak.
We are also a size where also partners and other actors in the ecosystem are interested to work with us. I think more about really focusing on what is the true potential of different parts rather than the whole part. There also I can see that, as we also indicated in the beginning with the different colors on the performance on the truck portfolio, but that goes also when you really look through the Volvo Construction Equipment portfolio, we are doing the same thing with the different business lines and the positioning. Again, average is the mother of nothing. Therefore we are really making sure that where are we now in market position, how can we grow it? Do we have the right profitability? Do we have the right scale? Are we relevant in all different factors?
Many parts have also during this period been performing at least on the same level as peers, and others have been a pretty substantial drag, and that we will not continue to have.
Your target to be a leading player in terms of profitability in the industry, that goes by segment or that goes for the group as a whole?
Yeah. Eventually, if it goes by segment, it will go for the group as a whole as well.
Yeah. You have different segments versus competition.
Yeah.
Some are more lucky or less lucky.
Yeah. I think what is important for us in the long run now is to continue to deliver on a number of very important parts to show investors and owners that we are credible in what we are saying. I think to handle volatility for different regions in a good and consistent way is one of these things. To make sure that we will not accept, so to speak, different business lines that are not performing is another one. The third one that I also think is important, where we don't feel that there is a natural fit in the group given that specific area, whatever it is, it could be a geography product line, whatever. That we are also credible in saying, this can be better hosted or developed in another form, for example.
There are a number of things that only can be shown by action, so to speak. I think those are a number of things that are critical.
Last question on the Asian JVs. Is it possible to give some kind of timeline to when that's going to have a meaningful contribution on earnings?
I think if you look upon it as it stands today, obviously, for example, Asia is a pretty small operation in terms of top line, SEK 10 billion or something like that. At the same time, the knowledge and understanding of what it takes really to be a relevant player, to use the sourcing network from Volvo Asia, and also to carry back a number of components, I think are even more relevant. When it comes to the markets in itself, I think China will be quicker given the fact that, as I said, logistical maturity is increasing. We today have logistical cost of, or logistical share of GDP that is approximately 18%. 18% for China, whereas in Europe, 9%, 10%. Of course, they see that this is dragging their efficiency as a whole with a number of percentage points.
There I think the shift will come and also given the fact that emission legislation, et cetera. That will shift in a number of opportunities. We have a strong position with DF, Dongfeng Commercial Vehicles setup, and also with complementing activity. Difficult to say. It's more that we keep the sweet spot for the different JVs during that development rather than try to push something that is not there, so to speak.
Cool. Thanks.
Hi, this is Martin Becker from Redburn. I have three questions, if I may.
Of course.
Firstly, on CapEx. You mentioned that CapEx is probably stabilized in the long run. If I compare CapEx as a percentage of sales of Volvo versus Scania, there is quite a big discrepancy. I appreciate that Volvo is a much bigger company, but that said, Scania really only produces one truck, one product, while Volvo has quite a bit of a range. Is it really reasonable to say that CapEx should not go up as a percentage of sales from today's level?
No, I think what is important to say, not commenting on competitors, et cetera, what is reasonable to say, over a longer period of time, of course, it will be a little bit volatile depending where you are on the product life cycle, et cetera. What you can see, given the fact that if you look at top line growth and unit growth, et cetera, we continue to have leverage as we have. It has no rationale whatsoever, in my opinion. Also when we are concentrating, as I said, now more on continuous improvement step-by-step development, both when it comes to the R&D portfolio, when it comes to new innovations that we are doing and we can use in the whole group, and also with the industrial footprint and the service networks that are well invested.
I cannot see any reason why we should not get leverage out from that, so to speak. I think we have a very unified view in management and in the board as well.
Okay, the second question-
That is also based by the story yesterday. Sorry. The cost system, as I said. Therefore, I think also in the coming event, we should maybe deep dive that a little bit, but that is a very important factor of that. To speak, to share technology and common architecture will drive the opportunity to share what is not important, so to speak, for the customer from a brand or from a performance perspective, but is still needed on a vehicle or on a unit, and at the same time make the right type of brand uniqueness and differentiation.
Thank you. The second question on organic growth. I think the lack of organic volume growth of Volvo has been one of the biggest struggles. I think we've had 12 years of exactly 200,000 units outside of 2009. In the past, we've seen the renewal of the product range, et cetera. What can you do from this point to finish these 12 years of zero growth on the Volvo Trucks business in the volume terms?
First of all, when it comes to organic growth, I think there are two opportunities, as I said. I believe the number one important for me, important, that is the service penetration. I think that has a very interesting upside for us when it comes to the volume growth. It's not only a matter of unit focus, so to speak. With the 200,000, anyhow, we are well-placed when it comes to scale and operational efficiency opportunities that are still untapped. I think for the time being, if I prefer to see 5%, 6%, 7% growth, and I think we have opportunities to really look to it also. As I said, we have been losing out market shares for mainly our acquired brands, pretty stable on the Volvo side.
Volvo Trucks side, here, I think we have good opportunities to work with what we have and focus our efforts more actually on the commercial activities, commercial drive, organically than big CapEx investments or restructurings, for example. There are absolutely room for improvements. Where we have had the more stable situation also from, so to speak, an organizational perspective, we have also been relatively gaining market share, like in Latin America, like in Australia, like in South Africa. Whereas where we have had more of turbulence, we have been a little bit refraining from the commercial focus.
Just very lastly, I wanted to hear your view on the truck industry in the Western world in general. We have the average weight of a truck continues to increase. You said, I think two or three years ago, that it's not only the heavy-duty segment that's taking share, it's also that within the heavy-duty, the heavier and heavier trucks keep taking share. On top of that, we have consolidation of fleets. A lot of these drivers show us that possibly the developed markets should be fairly stagnant in the long term. Apart from the cyclical volatility, there shouldn't really be any growth. Is this something you would agree with, or you still think there's going to be growth even in developed markets?
I think it depends on the number of factors, obviously. I think you're on the right track when you are saying that it's not only depending on the GDP development per se, it's also linked together with what countries, regions are allowing for technical development, for example. If suddenly in Europe we allow for 70 tons or longer trucks with higher volume capability, even if we are remaining, because as you know, 67% of the long-haul streets are going to volume restrictions and not weight restrictions today. That will obviously make a lot of improvements when it comes to logistical efficiency.
Therefore, again, I think the ability for us to have a bigger or a more in-depth relation with our customers on the service side, uptime focus, fuel efficiency coaching, connectivity, where it matters, where we really can provide value, I think that has at least the same type of value. It will go even quicker, by the way, in my view, in China, where the market will not at all grow in relation at the same time, but the shift into more sophisticated equipment and solutions will come, as we said, and that is, of course, interesting for us. That's the reason, again, why we are saying Prosperity Through Transport Solutions. To have that as a value and capability with all our different brands, applications, specifications, is the driver for us.
Graham Phillips from Jefferies. A couple of questions, please. Just first of all, on Renault. You talk about some of the potential for that to regain share. We look, clearly, it was a long time before we did have a model replacement come through. But to get that from orange to green, and I know the 2014 to 2015 was still deep orange, so obviously still unsatisfactory. What sort of share do you need to get back to in that business?
I think, as I said, one of the key drivers now for Bruno Blin, who is heading Renault and his team, and we have been working on that, is obviously to see where do we have the right potential also on country level and on segment level. As we have said also in recent months and terms, we have decided to exit markets where we have too low volumes, and it's really putting only a drag. When it comes to the core markets, I think we have a position that can make, so to speak, the brand sustainable, profitable. Given that, there is also an upside in many of Southern and Eastern Europe, North Africa, and also in selected countries in the Middle East, where Renault and also together with the sister brand of Renault, Arquus, extremely appreciated.
I'm not too worried about the critical mass of the volume. It's really that we are getting the act together on the regional focus that we have, and also that we are even more maybe for Renault, really working with continuous improvements on the product portfolio now with the strong platform that we have, rather than loading it with unnecessary R&D and other technology, for example, to meet the customer base that they traditionally have and will be succeeding in.
I guess I was meaning within Europe. You can get it from orange to green in Europe.
Yeah
without having to get any more share. For instance, in France, I think the market share fell from a high 40s into something in the 20s today. You don't have to get back to that 40-odd % to get it into green.
No.
Okay.
At the same time, I think it's fair to say that we are today, to be a little bit more exact, on 28%. As you said, it was not a high 40s, maybe. Maybe if you put together Berliet and Saviem, everything once upon a time in the glory days. Maybe, from the high 30s, and we were down to 25 or something. I think, to regain in France, we have a strong network, strong presence, we have the medium-duty range complementing, et cetera. To start with the three, I think, is more than reasonable, and that we can do also in a profitable way, so to speak. We are not buying shares.
Okay. The second question is on the slide where you had the untapped service potential. One of the ones that showed the biggest upside was workshop. Of course, you don't always own the dealers, and I can obviously contrast with your previous employer, where you do own a lot more of the dealerships. Is there anything envisaged in terms of changing the ownership to either own more dealers or to combine more dealers so that actually, you can capture some of that rather than leaving it to a third party to gain that benefit?
Obviously, when it comes to the European system, I think we are, that mainly done for Volvo Trucks, for example, not that far away from the integration level, et cetera, given the fact that we are operating in many of the bigger urban areas with our truck centers. I think the main thing here is really that personally, I have no specific preference as long as we see that our dealers are performing, because even if we are not owning, we have with our private investors a very good presence, customer loyalty, this driving parts, it's driving other type of activities.
From that perspective, I think we are very pragmatic, what is the right for each area, and still the main issue for me is that we have too big volatility between good and low performance, both on the private side, if I may say so, and in the captive side. That is more of a priority than really to maybe acquire. If a bird flies by, we are always willing to do that.
Okay. I guess the final question is, we've heard a lot today about the opportunities within the markets and the operations of the company. Can you talk a little bit about the structure of the company and clearly addressing perhaps some of the concerns investors have had over the years about the cyclicality in Volvo's earnings?
Which obviously come from partly exposed to truck, but also construction equipment and so on. The rating agencies, I think, again, have similar concerns why your credit rating is so low. Have you thought about the structure of the company and what might improve investor sentiment around those particular issues?
No, I think, first of all, the proof, obviously, in the pudding is to continue to deliver, and I think we have now since four or five quarters more visibility, so to speak, the measures we are taking and how we are doing it. Services, coming back to that, is one very important factor for me when it comes to the resilience to meet volatility in units. I think we can be even better in using, as I said, the regional value chains to make handshakes in the organization about what matters in Latin America, rather than the industrial system must go up to Sweden to take measures and the commercial system must go up, and we do the handshake up here to have much clearer decentralization, and they have to manage that local or regional volatility, for example.
Services, regional value chains, and obviously also that we are not, how should I put this to be clear enough? That we are not investing for final volumes. If we are doing something, I have seen a trend that we have been building the business cases on volumes that should be, so to speak, sort of the end phase. If we believe in 20,000 units, we invest on the sort of 20,000 units rather than to go with a system with a little bit higher variable costs but lower investment levels. When the market are maturing and when we have the right level of market acceptance, then we go for a more full-fledged industrial situation, for example.
There are a number of measures that we are doing, and I think also that I showed this very schematic slide of operational portfolio on strategic level, and I think also on governance-wise, we have been pretty clear on where are different questions belonging in the company. We are not losing out flexibility and speed, so to speak, not at least when it comes to short-term and cyclicality. One thing there, sorry, because there are so many different things, that is also that in markets where corrections are needed, it could, for a shorter time, be better to be a little bit more brutal on the brake, maybe lose one percentage point very short-term, but not ending up with a situation that will attempt to give you a lot of attention of unsold stock or whatever.
I think have the right focus on market share and growth, but not to the expense of being afraid of taking the right measures when the market is changing.
Thank you.
I don't know if that was clear about the
Thank you, Jose, JP Morgan. Just a couple of items, please. Can you give us an update, please, on how far you rolled out by region or by brand the common engines, transmissions, and chassis structures?
Yeah. Generally speaking, this is, of course, different levels of commonality. When you say chassis, for example, it is really not on chassis level, it's more on component and system level. You can say that obviously in Europe, we are pretty far reached on powertrain, and the full powertrain, still, so to speak, with the specific requirements for the different brands. We have good traction as you know also in Latin America, we have only one brand. In North America, we are on good track with the powertrain. Also given, so to speak, the nature of the different segments for the two brands, it's not that much of a commonality when it comes to other components. Really on powertrain, good traction, and not at least lately than on the AMT or the mDRIVE for Mack.
When it comes to the Japanese, we have taken a number of steps now also where we are actually upgrading the heavy-duty platform step by step. I think generally overseas markets is really based from the Volvo Trucks in Europe. Pretty much platforms are there, but now it's about refining and continuous improvement on it.
Two follow-ups. Can you give us some sense of where you see CapEx to D&A over the next three years for the business? Also, if you could come back again on the rationale for Renault and Mack brands in Africa and Oceania, as well as Mack in LATAM, please.
Yeah, I think obviously when it comes to CapEx, I think I've been pretty clear on the indication where we are heading. I will not be more specific than that. I prefer deliveries first. When it comes down to the relevance of the different brands, I think, again, as you are pointing out, as I showed again on this slide, depending on if you take, for example, Mack in Latin America you have a number of markets where you can really leverage from the definition that you have in North America and in Canada and in Mexico, et cetera. Even if there are pretty small volumes, with the right structure, you can put it up. It depends really on where you are.
It's true also that there are a number of market areas where we will continue the pruning for different brands, including Volvo Trucks, also in some cases.
All right. Anders Trapp, SEB.
Now it's you.
I have a question that is more near term, actually, short term oriented. Of course, you've been meeting a lot of customers in the last year. I guess you know them pretty well. What do you think will be their gut reaction to the Brexit in Europe? Will everyone just postpone their investments for half a year, or what do you think is going to happen?
I think we will see probably some short-term reactions, that depends also what sector you're into, what type of contracts you are having, if you are in retail in France, you will continue and work with the fleet renewals. If you have some sort of relation with markets that can be affected, I think we will see. That has been a change for me during my years in the industry, that with the transparency we have now, you can almost see it directly on different sectors in the one week after or something. It can be something, but I don't think that will have a big lasting effect, actually. It will be more about long-term or mid-term consequences about the psychological effect of GDP development in Europe, basically.
I think we will see some hiccups in the curves now because uncertainty is never good, obviously in Europe, that has been ticking pretty well now. Let's see. We will see some ticks related to some segments, I think.
Looking on the other side of the Atlantic, orders have been pretty poor in the industry for a while.
Yeah.
There's high inventories in dealers, although they are declining. When do you think the order cycle will leave these extremely low levels?
I think as always, when you have a correction downwards, it tends to take a little bit longer time to clean out stocks and inventories and get the right balance. At the start of this year, we're talking about until late summer, beginning of the fall, our view maybe is that it will take this year to clean it out in a good way. What we are concentrating on, obviously you can get the question, we have our current forecast, we have the quarter two reporting now in a couple of weeks, around 250,000 for the retail shipments. I just see that the other guys are hovering around the same figures, a little bit lower, a little bit higher. The interesting part now is really to manage, as you say, the balance between inventory, production and retail sales, I think. So far, so good.
We are taking down volume another step now during vacation, because we are firm on showing that we can manage volatility in a good way. That is the number one priority for us.
All right. Moving over to Asia. You said you are sort of carving out UD Trucks a bit to measure it very carefully. It's not been doing really well since the acquisition a number of years ago. Is it completely unthinkable that you actually might divest UD Trucks if it continues to disappoint year after year?
No, I think, again, coming back to what we said here, nothing is unthinkable, because then suddenly this slide is becoming only theory. What we see now with the measures we have been taking, that we are taking for the time being, and also activities that we have in pipeline, gives us confidence that we will see improvement, but they must come through in a good way. We must make sure that they are sustainable. The core of it is primarily made to make sure that we have a value chain that is really directed mainly to Japan for what we are carving out, and an even stronger, so to speak, pull from them what they can use, and have that clear, so to speak, interface with the rest of the group and with some selected export markets.
That is exactly what we're working with now in the business plan for UD Trucks. Again, every brand, every business area, must in a reasonable term, deliver on its own merits.
All right. Thank you.
Thanks. Mike Robb, Kepler Cheuvreux. Hi. I think the plan you introduced today is, from my standpoint, fairly congruent with what I think a player in your industry is going to need in the next 10 years. Most of the information you've given us has been just qualitative in its nature.
At what stage are you going to give us more quantitative information? Or I guess what I'm more looking for is any type of information that tells us to what extent is going to drive down the cost per unit relative to today's status quo and so forth, please?
Yeah, I think in the name of credibility, I think we have to do that. First and foremost, I would prefer to do that through our normal reportings to see that things are continuing in a trend that we are expecting and that we are focusing on. Also, by giving this type of information that we did today and follow up later on also in other type of events, of course, in the name of transparency and credibility, this is of course very important. Absolutely.
What would be the timeframe, roughly, we should be looking for from today on? Any rough indication for us?
Let's see. I think, again, as I said, already during our normal quarterly reportings, I think we are step by step also increasing transparency on what we are doing because it's important for us vis-à-vis our owners and investors that people feel confident about what we are doing, what are the consequences of those actions, and what is it bringing short term, but even more important also for the medium, long term, and the direction of it. That is important for us also to be credible.
Thanks.
Hi, this is Nikhil from JP Morgan. I just have one question. Your number one strategic priority is to regain market share. I was wondering, because Daimler Truck had a trucks capital market day recently, they also spoke a lot about market share. Are we going into an environment where pricing is going to be a lot tougher, two major players are going to fight for market share? Do you think so?
First of all, I think it's very important to have a clear strategy, where and why and what segments and how does it look like. As I said, when it comes to regaining market share and position for our three, if I may put it so, historically acquired brands, I think we have room for improvements given also our historical level and customer base and really focus on what we have. The biggest upside for us is not regaining market share in a quick pace that will erode price position because then we will not gain anything anyhow, so to speak. We don't feel that it's a quick fix. We think it's a focus activity. All brands, as they stand right now, have the opportunity, as I got a question before, also to turn from low to medium and to high performing.
In selected segments, to add volumes with focus, I think is a full possibility. We are not searching to do that in the broad scale in that sense.
Hi, I'm Mike Robb, Kepler Cheuvreux. Perhaps getting back on your technological architecture strategy. Just to make sure I'm getting this right, CAST is just in reference to heavy-duty product or would that also partially or perhaps fully comprise medium duty?
Yeah. You can say that a core system of a company of our size and of our width, so to speak, or the product range, it is a number of interfaces that could be common across. For example, overlapping structure when it comes to the engine platforms, where you can have the same interfaces and use the same components. There are a number of parts of the vehicle platform where you need to have it more specialized for medium or heavy duty. In fact, it will be a combination. The thinking, the strategy, and the way of working will be the same for medium duty as for heavy duty, and for other business areas where it makes sense, obviously.
The architectures for emerging markets would be different though? Because you need to be more price competitive there, I presume.
I would say the technology content will be different, but not necessarily the architecture. As long as you can keep the same dimensional interfaces, you can also more conveniently upgrade different type of components as the market is maturing. What we are trying, or not only trying, what we are doing, because we can decide that, is that we are pretty firm on the interfaces because it makes sense. It doesn't cost anything. The interfaces, they are just measures on different dimensions in space. Between those interfaces, you should be able to use the right technology level and sources in the right place, depending on what type of applications and brand you are talking about.
Thank you.
Johnson Amoak from Bloomberg. Just wondering if you could talk about Iran and any potential opportunities that you see there, and have you restarted the JV you had there?
First of all, we didn't have a JV, but we had a partner that had substantial operation for us when it comes to production. Obviously, as all other companies, we have intensive discussions on how to restart also given the relief of the sanctions and the opportunities that will come into the Iranian market. We have, both for Volvo and Renault, traditionally very strong positions, both on the truck and bus side and also construction equipment. Still the market is very slow due to, so to speak, draining the financial systems, et cetera. This will be an interesting opportunity as we move forward, and we have both strong networks and the industrial presence when needed, so to speak.
Thank you.
Good afternoon, Martin.
Hello.
Sorry, it is Justin Bracken from Sanford C. Bernstein. I have three questions, if I may. First question is around CapEx and operational excellence. Sorry, scale and operational excellence. You mentioned at the beginning of the talk that scale was very misunderstood, in your perspective, by the investor community and the analyst community. You have also mentioned during this talk that operational excellence is very important to Volvo going forward. Could you talk about how you are going to convince the investor community that Volvo will be able to deliver profitable growth versus the previous five, 10 years of less profitable growth, and why scale isn't as important in certain areas, why operational excellence really is?
First of all, how I and my team and all our employees can convince the investors and the owners is that we are delivering good results over time, and that we are doing also, with a clear visibility on why and how. I think we have been disclosing a number of the backbones we believe in. When I say that scale is overrated, what I mean about that, I am a little bit on a mission here, is that scale, in the wrong context, can actually lead to the wrong type of conclusions on what you shall do. Normally, you look upon scale as doing a lot of things. Relevant scale is doing a lot of same things.
You should be very clear about what same things that you can do without, so to speak, hurting the opportunity of tailor-make or really leveraging different brands, positions, application segments, or whatever. I think therefore, also when it comes to scale, it depends on where you are in the value chain, what is, so to speak, the different opportunities you have. One of the most important parts of scale or critical mass for me is knowledge and knowledge sharing in some of the critical areas. There you can gain a lot. There are obviously a number of things that is bringing scales, but on different type of multiples. If you have, for example, an engine line, when you are running it three shifts, you are running three shifts, so to speak. The next step is to add another one.
I think given the restructures we have done now, we have a footprint where we can host a lot of increases when they are coming. Service hours, more units. Also when it comes to operational excellence to really continue to work on the continuous improvements of quality on day-to-day basis, better involvement of people, the delivery precisions, less urgent shippings, and really have the focus on the ball that we are delivering so our salespeople and our mechanics out there meeting the customer can stand with a nose to the customers and feeling that they have a full-fledged system that is delivering every minute on their promise. We discussed that last week. We had a very good, so to speak, start off with the business plan activities. We said, excelling on the basics will still make us unique.
A follow-up on operational excellence, sorry, if I may. Having been to the last two capital markets days, both in Sweden and in Belgium, I was struck by the difference and the different level of quality between the two production sites. One being, from my point of view, a little bit more streamlined than the other, whereas they both produce very similar trucks. How much of the operational excellence really leads to increased integration between the different brands across Volvo? I don't think that has been evident, at least from speaking to the investor community, in the last few years.
No, I think when it comes to the base as such, for example, if you start with, for example, final assembly. There, I think, the work with Volvo Production System, the sequence, how do you actually deploy best practices coming from the different plants, from different real realities, so to speak. There is a very good potential. We see good traction in that. You're absolutely right, that there is still a difference, obviously, between the different plants. I think that gap is getting closer. We see traction as that there is a culture also embracing opportunities to learn from each other, which is great. I think also in all fairness, that depending on what plant we are talking about, they have been undertaking a number of pretty big changes.
Now when we are more or less, because it's always happening something in a big industrial system that we have, through the big restructurings to get everyone to really focus on continuous improvement, teamwork, take ownership of your workstations, the flow thinking. Not at least also in the logistical systems, both when it comes to vehicle logistics and port logistics, it's a great potential. The learning factory between factories is a very important part of that, so I fully agree on that.
My last question actually plays into the last two answers you've given around culture of the company. You mentioned that's a very big, important change for you that you want to make happen. How much of a challenge will it be, and how long will it take to change that culture for you? How much similar to Scania will Volvo end up being?
I think it's unfair to Volvo to always have a comparison like that because we have so many great assets. What I think is really important, the closer the customer you come, the more the same it is. It's a matter of size, et cetera. That's the reason why I say that important for me as leader and with my management team is really to make sure that we are given the ability for the different units to stand on their own merits when it comes to P&L, and the development, and taking decisions, and agility, and you create that part of the culture. We have said is that when it comes to the corporate clock, so to speak, we have one week per month, and we are doing the more, if I may say, bigger meetings that have company impact.
We do that so we can release that other three weeks to be out and talk to people, what do they need, how do we release the energy, and how do we make sure that we are conducting the change? You can never implement culture, your own culture. Everyone's working for Volvo or any other company, they will decide in their own head if they like what they see and if they are given that extra mile, et cetera. That will be a never-ending story. The good news is that we have very good traction about the values, the operating model, how we should do this together, and also with a big respect for what has been done the last three, four years also. I think that is very important for me to be clear upon, that it's not right or wrong.
It's depending on different stages in the company's timing, so to speak, yeah.
I'm right in saying that you're moving the company from a technical and operational focus to more of a customer and profitability focus, and that would take a little time to do.
Yeah. More customer, I will say that also operational. I think we have done a lot of things in the company to feel the pulse in the whole company regarding, for example, deliveries, lead time, delivery precision, quality levels, having the same, so to speak, targets in the connected parts of the value chain, not silo based. Get, so to speak, the voice of the customers into the company. Obviously, you don't do that in eight months, we have a good atmosphere, and we have a fighting spirit.
Thank you very much.
Graham Phillips from Jefferies. Again, a follow-up question on the untapped potential in the services area. Can you talk a little bit about the technology head you have on the board now, and what connectivity could bring? I guess it's part of the 10% other that's part of the pie chart.
Yeah.
Very small today. How big could it be? Will it be profitable? Will customers expect to get it for nothing or for small cost? Will you be able to make a decent sort of margin better than Traditional manufacturing?
Yeah. I think this is obviously one of the core areas that we're working with. When you have an area like connectivity, obviously you will have, so to speak, the connectivity as an enabler and really making sure for what type of services you're using it for. One of the services that we see already today appreciated by customers, obviously, so to speak, the information we are giving to them in different steps based on that they are buying. We have a basic package that you're, so to speak, getting together with the truck. We also have a pretty good upgrade frequency on more advanced type of information. That is one part of the connectivity, what you're having direct with the customer in terms of better information. Will that be big revenues?
Yeah, I think so moving forward, because people will get used to it, and will have that as one of the supply sources. Even more important, as you were into is also that the connectivity will drive better efficiency for us to serve the customers when it comes to the more normal services that we already today are delivering, like the repair and maintenance contracts, where we are also seeing that with connectivity, we get better performance both for the customers and for ourselves. We can pre-plan better what is happening, how does it look like, we can do remote diagnostics and thereby also minimize the turnaround time for customers.
We see it also when it comes to the operational performance of our finance portfolio or insurance portfolio, where we more tailor-made can make offerings so you don't have to pay the average insurance, for example, but on your own behavior. We see it also for other type of more advanced contracts like uptime services, where our U.S. operations, both for Mack Trucks and Volvo Trucks, is actually leading that. We have a newly integrated uptime center that is, I think, industry leading for the time being on that. Connectivity, definitely we have the base. One of the abilities we need to improve, as I said, we have data, so we can manage it for the coming many years. Really, how do we have good analytics and make, so to speak, actionable services out of it that counts for the customers?
There we are working a lot today, and that is a typical area where we have group ability, actually, because the same demands are coming in for Volvo Penta and for Volvo Buses and for Volvo Construction Equipment, for example.
What proportion of customers are taking the next level up in terms of on-time service or real-time connectivity? You get the basic package free with the truck, but then you were saying?
Yeah, it depends really. It could be in many different sectors, and also a little bit on the maturity level of that specific company or if they have other type of measurements. I should say, generally speaking, I think the biggest taker today is really the mid-sized fleets that say, "Okay, we don't want to have our own backbone," because many of the really big fleets, they already have some sort of captive backbone where they are following it and maybe are using some of our connectivity data to plug into there. We need also to have that open interface also. Really taking that upgrade is many of the mid-size fleets and then some sectors, obviously also like mining, for example.
I think that we will see that more and more because if you think about the potential when we really go through and do a Dynafleet study, for example, and additional training and a specific tailor-made package. Often we can see results of 4%, 5%, 6% of fuel savings. When it comes to engine development, that will take four, five, six years to do, so to speak. There is a great upside in our ability to show that value to the customers will continue to be important. Another part that we have seen is also given the connectivity, we can also follow, is there something, so to speak, also to do on the tuning of the full specification for the next truck? Should they have other type of rear axle ratio? We can follow exactly how it looks like. Great potentials.
Again, to focus also to not have too many, we can do this and this and this, and then have 0.5% penetration. It's useless for everyone. We need to get traction also in the penetration.
Yeah. Hi, again, Mike Robb, Kepler Cheuvreux. We had some news flow overnight coming out of China that apparently local politicians are currently contemplating to lift the 50% ownership cap for foreign manufacturers in vehicle producing operations. Is that, from your standpoint, an opportunity in mid to long term or perhaps even short term to step up your stake in the joint venture locally?
Generally speaking, we think it's always good when you don't have caps. We are, as a global company, the better maneuverability all partners have to actually base the relations based on commercial and partnership merits is better. Yes, that is always good if you are lifting restrictions. At the same time, when it comes to joint ventures, my firm belief is that it must all anyhow, even if you have 40%, 50%, 60%, 70%, as you know, we have a majority stake in SDLG on the construction equipment side. We have minority stakes in the two truck JVs, where we deliberately went down by selling the shares in the mother company, Weichai. Because at the end of the day, if it doesn't bring enough value to the different parties, it will not work anyhow.
I think the most important for us to concentrate what are the different competencies and values the different partners can bring to the table. Obviously, if restrictions are lifted, it is giving a bit better maneuverability moving forward.
Thanks.
Okay. Let's go for a coffee or whatever you like, guys. I think you have been brave to standing and sitting and listening to so long. Thank you very much for coming. See you next time. Thank you.
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