Dear shareholders, ladies and gentlemen, the CEO and Group Manager of Volvo Olof Persson. Thank you, my dear shareholders, and welcome to the concert hall of Gothenburg and Volvo's AGM. And as we do traditionally, we award the Volvo Technology Award, an award which was presented the first time in 1988. So this is the 28th award. And the Volvo Technology Award is awarded to particularly progressive technical innovations in the Volvo Group for because innovation is at the heart of our operations and it's also a condition for our continuing to be world leaders.
And this year, the award goes to the team responsible for the I Shift Dual Clutch, which is innovation that will renew the industry by improving the driveability of trucks, but also the driver's work environment. In brief, the I Shift Dual Clutch is an automated gearbox with dual coupling and the solution means that this truck is able to switch gears without any power disruption whatsoever. And this is a fantastic property for starting in an incline or driving in forests where previously it was more or less impossible to get the truck going and getting it accelerating. And this type of gearbox was initially developed for very advanced sport cars and is currently also available in regular passenger cars. But thanks to our dedicated engineers, we have now for the first time in the world succeeded in adapting this technology for heavy vehicles.
On our shareholders, it is truly a great honor for me to present the Volvo Technology Award 2015. Please come up on stage Klas Bergstrom, Lennart Bruswedd, Anders Hedman, Lars Simonson and Lars Erik Theoderson. And as is tradition, we will now be presenting the diplomas to the winners. Anders? Anders?
Thank you. Congratulations. And last but not least, Lauferik. Congratulations to you too. Well, Leonard, this is an amazing award after years of hard work.
So how does it feel after so many years of development finally seeing it in the market and hearing the feedback from the drivers and from our customers. Well, of course, it feels amazing. We've had a number of obstacles to overcome along the route. And finally, we succeeded. And have heard wonderful feedback from the haulers and from our customers from the drivers.
And well, this is a completely new product that will provide Volvo with a clear competitive edge. But since there are so many components that are very similar to the standard I Shift, you have really focused a lot on the production aspect of this because it doesn't require many new parts and we don't have to redesign development. What were your thoughts when you developed that? Well, we did focus intensely on trying to keep as many parts as possible. And we've succeeded quite well.
We assemble it on the same line as a regular I Shift and there are several parts that they have in common. So I really do feel that we've done very well in that regard. So I've always first again to launch a new technology to the market and this will give us a clear edge in the market. What would you say the reason is that Volvo again has succeeded in beating the market and impressing the market. Well, we have an excellent dedicated team that work with developing transmissions in Volvo and the Volvo Spirit.
Yes that will take you far. It will take you far. I know whether you would like to say a few words Leonard. So stage is yours. Well, ladies and gentlemen, I would like to take the opportunity here to say thank you to the entire team on behalf of everyone up here on stage and thank Olof and Volvo for this wonderful award, the Volvo Technology Award.
From something that began as a back in the envelope sketch as early as in 1987, and then after extensive project work that only got underway in 20.08, we have now managed to develop a new world leading product from Volvo I Shift Dual Clutch gearbox. And make note of that name, the I Shift Dual Clutch. What we knew already at that time, but we couldn't really create it because the technology was not there yet. But now it has seen the light of day. It's been a long journey with a number of difficulties to overcome A lot of new technology both for Volvo and for our suppliers as well needed to be developed in order to complete this project.
And just as Olof mentioned earlier, this is a gearbox that will improve the drivability and the driver's environment in a very positive manner. Not least, we noticed this quite early when we received the report from one of our field test drivers. And those are people who on a daily basis drive our products and test them during production and development. And the report stated and I quote, I only have one word to say about this gearbox, amazing. And this was clear evidence that we were on the right track.
In 2015, we also won an award for the best quality innovation. And that's a global award that is presented every year. And in Sweden, it's represented by the Swedish For Quality, SIQ. So those of us who stand here today receiving this award, naturally we're only a very small part of an amazing team that has worked very hard to develop the I Shift Dual Club show. This is really an award to all of us, all of those who participated with great commitment because without their experience and their expertise, this would never have been possible.
So once again, from the team and everyone else involved in this project, thank you very much. Thank you, Leonard. And I think it's time to see some take some pictures now for the family photo album. Trying to squeeze my way in here.
Okay. Thanks, Anthony.
Thank you. So honored shareholders, I think we give them a round of applause please to our winners of the Volvo Technology Award. Thank you very much. Thank you very much. And with that, we hand the floor over to CEO, Olof Persson.
Please. Thank you, dear shareholders. During 2014, the Volvo Group has taken an additional important step in our journey of change. And I think it is important to keep in mind that it is a journey of change that we're in the middle of, a journey that will last for 4 years and begun in 2012 and will be concluded in 20 15. And 2014 was a year of streamlining and efficiency programs.
That was a year when we had extensive focus on reducing our cost levels, research and development administration and sales, but also to improve the efficacy of our industry system as well as structurally reducing our cost level for the group as a whole. Another focus during 2014 was also to increase market shares around the world for the products that we've launched, but also for working on the product portfolio that we've had already for several years. And we are following our plan, dear shareholders. We're starting to see the results of our hard work over the past few years. There is a lot that remains to be done, but we have come some part of the way.
And I will come back later with more details. First, however, I would like to just provide you with a brief review of the developments in our most important markets around the world. And we'll start with the heavy vehicles market, the truck market. If we take the total global market, it was on the whole unchanged in 2014 compared to 2013. But there are significant regional differences.
If we look to the regions, we see that North America had a very strong year driven by good strong economy. And we also saw demand increasing because of our customers who are rejuvenating their fleet thereby also ordering more vehicles. A completely different situation is South America where after the series of successful years saw a downturn of 11%, primarily driven by lower financial activity in the largest country of South America, Brazil. In Europe, we can see that the development shifted laterally or was unchanged for the 4th year running. But we saw differences during 2014 here as well.
Germany had an excellent development. We saw an increase both in Spain and in Portugal, while Russia had a very weak economic trend thereby also a fall in demand for our products. If we move more eastwards, we can see that we had a strong trend in Japan, primarily driven by the fact that structural investments started in Japan, but it was also due to the good financial development. The positive surprise last year is India who after several difficult years after their elections saw new optimism and we could see that in general in market growth in India during last year. But the rest of Southeast Asia, we can see that the mining industry is holding back demand very low activity in mining industry.
And we also have political instability in certain countries that have very much driven by advanced bookings, but that tapered off later in the year. And over the year, we're 4% down in China. Overall in the world about 8,700,000 heavy trucks were sold last year and that is more or less exactly the same level as 2013. We kept our position as the 2nd largest manufacturer in the world in 2014. And irrespective of the trends in the individual markets, we have strengthened or maintained our market shares in our most important markets.
If we then look at the development in construction equipment,
It's been severely affected by the slowdown in China and that slowdown came predominantly due to severely reduced construction and infrastructure activity, but also lower activities within the mining sector. And it's actually so that the Chinese market and the Chinese volumes, they've halved in fact 2014 compared with the peak year of 2011, severe reduction. In the other markets, the construction equipment market was given roughly the same trend as you see on the truck market. They are connected since the correlation between economic growth and market growth is quite high. However, you can see clearly that the construction market was even more affected by the low activity and continued slow activity within the mining
sector.
If I then turn to a few of the most important events in 2014. Thinking of starting off by talking about developments in North America, it's been very positive for Volvo Group during 2014. And I just arrived from Mid America Truck Show, the largest truck trade fair in North America. And the ambiance in the industry in North America is very good. It's also gratifying to see that both group mak trucks and Volvo trucks they are well competitively in North America.
This is a consensus strategy that we had during many years to improve the situation in North America. And we can see that in 2014, we saw a considerably improved profitability, but also increased market shares of both our brands and we now got a combined market share of 20%. And we not only track the market in North America, we actually try to change and affect the market there as well. And a good example is our drive for automatic gearboxes replacing the traditional manual gearboxes on the North American market. And we can see that that strategy has been very successful.
During 2014, 66% of all our trucks that we sold that had a Volvo gearbox built in. And 95% of all the trucks we sold had a Volvo engine. This is important for 2 aspects. On the one hand, it seems means that we can optimize with our engine and gearbox the functionality that the customers want. But also over time gives us a very good basis for increasing our spare parts sale on the North American continent.
Another focus area that we've had during 2014 in North America is our service and dealer network. It's gratifying to see that during the past 5 years, our dealers spent DKK4 1,000,000,000 almost to increase and expand the dealer network in North America. We foresee the results. And finally, want to point out that we are leading in North America on telematics. And we've got a big drive to get better offer when it comes to the uptime, so called.
That is ensure that the drivers can utilize the vehicle as much as possible. And we do that through using telematics. And today, we've actually got 80,000 trucks, which are connected and speak with one another and with our dealers and our central functions. I talked to you during a number of years about this drive, this fantastic new product range that we've launched and which is now on the market and has been out during a number of years. And the question is, what was the result?
And I can clearly see that we were entirely right in our drive. This product program has been fantastically received on the market And the products have met the highly staked demands on quality, fuel economy and also new technology that our customers require. We've also taken that little extra mile to implement and install the great changing technology I Shift Dual Clutch technology involved with dynamic steering and the result from these new technologies have been great. I said when we started launching this and until last December last year, more than 60,000 of these trucks in this range These were sold 45% of the new. And our market share has increased as a consequence.
If you look at Europe, Autotrux has got the highest market share in Europe in actually 20 years now. And we made it for affordable price and a good margin for us. So very well down for the entire organization with this important launch. During 2014, we took the next step. We launched this product program also in Asia and towards the end of last year, also in Brazil.
So we look forward to many years of continued success, continued development of this fantastic product program. Also Renautrox took a major step with the new product family launched a couple of years back. Also this product family has been very well received by its customers. They appreciate the high security, the fuel economy, the comfort and also the road keeping with good qualities. We're very proud that we've been nominated International Truck of the Year in 2015.
This also means that the Volvo Group has captured this fantastic trophy 2 years in a row for 2014, while Volvo Trucks won it. We've continued our work during the year to build out the dealer network for Renault Trucks and we are now 30% to 40% more service points for Renault Trucks than we were in 2012. And that's building trust and also appreciation with our customers for the Renault brand. We also think that the order intake for the new product program got to a good start towards the end of 2014. We can report in the Q4 an increase in the order intake of 70% compared to 2013.
Finally, you may say, our strategic alliance with Dongfeng is in place. Dongfeng or DFCV is today the 2nd biggest in heavy duty trucks on the Chinese market, which is the world's largest market. This is strategic alliance where we're major owner in a very successful Chinese company. We've had a strategy which is mainly focused on 2 parts. On one hand, in China, continue to strengthen the Dongfeng brand to make sure that the Dongfeng brand develop with a technological development that we believe is going to take place in China over the next years and the next decades.
We've also a plan to strengthen the aftermarket. The other leg, the other part is to establish Dongfeng as an internationally respected brand to gain in the segments where Dongfeng is active recognition. What it means to Volvo, we're 45% shareholder in a successful and profitable company for 1, but there are also great synergies for the Volvo Group. We've already struck an agreement on gearboxes. We are in discussions regarding motor engine strategies and we're also going to utilize and make sure that we get access to Dongfeng's enormous supply network.
And we also believe that with time, this strategic alliance should help us to strengthen Evolva products in China during the process that we are quite certain will develop within technology and other areas in China. We've had a great start. 1st board meeting has been done. The management is in place and they're working hard to make sure that we get a good start to this strategic alliance. Very gratifying.
We cannot look at major important events in 2014 without talking about Construction Equipment and they've had a really tough year. Double setbacks. On the one hand, the mining based demand has continued to be low on low levels. At the same time a severely drop in sales on the Chinese market. Both of these segments have important segments that were profitable for construction of Pennsylvania and naturally it's not an easy market to be active in.
But we've started intensively to work to strengthen competitive situation within Construction equipment. And we decided during 2014 that backhoe loaders and motor graders are going to be moved in production to China and be sold on the Gramest ELG. That means that we're going to close the factory in Poland and we're going to make reductions in Brazil and the U. S. But there's further work to be done internally and we're going to continue working very hard to reduce costs in all parts of the organization.
But not to forget, it's quite a difficult market situation. I think it's important not to forget that Construction Equipment has got a very strong product portfolio, product portfolio which furthermore is very well invested. We've got 2 strong brands, Volvo STNG. We're number 3 worldwide, so a major player. And furthermore, we are number 1 in China in one of the absolutely biggest markets in the world.
Let me move on to an area where we are very much cutting edge, electrification of commercial vehicles. And here I see huge potential in the future within all our product areas, trucks, buses, construction equipment. We've chosen to use buses as the spearhead of the group when it comes to implementing this technology and see how it works. And we've offered hybrid solutions for number of years with great success throughout the world. And last year, we decided to take the next step and launch the so called electric hybrid.
It reduces fuel consumption by up to 75% compared to a traditional standard diesel bus and the interest has been enormous. And we have struck agreements with big cities as Edinburgh, Hamburg, Gothenburg and Stockholm. We also, this summer in Gothenburg, going to introduce the so called Electric City program, a unique testing arena where we're going to test these buses, where we're going to test new ways of designing our bus stops. They're going to be, among other things, indoor bus stops. We're going to have a new way of communicating inside the bus.
And simply with this test arena, we want to promote the bus travel to a better higher level. We do this in cooperation with the Gothenburg City, Shums, University of Technology and a lot of other partners. And we cannot forget also West Traffic, the Gothenburg local traffic system. And it's gratifying that Gothenburg is going to be the hub of this new development. I believe this technology is going to promote commuting traffic to a completely different level and in particular for buses.
Let me mention a few words on sustainability. The Volvo Group has, during a number of years, been very active in creating a sustainable society. We feel it's great. We are entirely convinced that sustainable development is a profitable business. It's a development where we, where our technology can contribute.
On one hand, we create a more sustainable environment for everyone who's living in the community. And on the other hand, we also believe that this is going to create a lot of business opportunity in the future. Let me take 3 tangible examples. We are dividing sustainability and environmental sustainability, financial sustainability and social sustainability. When it comes to the environmental sustainability, everyone knows what we're doing when it comes to our products, we're reducing fuel consumption, we implement new technology.
The example I just showed on the last picture regarding the buses in Gothenburg, that's a great example. But we also do a lot more internally. What you see on the left hand picture is a picture from our factory in Ghent. It's our first carbon neutral factory. What we did a few years back was that we invested in wind power.
We invested in energy effective efficiency measures. We also invested in educational personnel. And in 2, 3 years, we managed to repay this investment. And today, we've got a positive return on this investment. At the same time, a CO2 neutral factory.
And for those of you who've been into Belgium and seen them, it's quite windy, quite a lot there. And during those days, we are actually a supplier of electricity to the Belgium power grid and we actually sell it. Once again, good business for the group. When it comes to the financial sustainability, it's a lot about how we act and how we make sure that we create growth in all the 190 countries in which we operate. UD question, talked to you about this before.
It's Asian Truck Line, which is built in Asia, developed by our Asian colleagues. It's going to contain components from Asian suppliers. This product will create thousands of work opportunities in the regions where we produce it. But it also gives us a very good business because of this product we can sell to high margins to those markets we want to enter instead of taking a product from Japan. So here we're building a better margin business.
At the same time, we're making sure to help to create economic growth. 3rd example, the social sustainability. We try to grow in Africa, primarily South Saharan Africa. And one of the major issues there that we run into is the access of skilled labor, especially mechanics. What we've done, we've gone together with the Swedish Development Agency and the U.
S. Equivalent, U. S. Aid, and started a development program for 1,000 mechanics in 10 African countries. On the one hand, we make sure that 1,000 persons in this region gets an education and job, create economic growth.
At the same time, we make sure that we get something that we really need in order to be able to grow in Africa. That is skilled mechanics who are going to help us to create revenue in the so important aftermarket. These were three examples that I think is important to bear in mind that sustainability is also good business. Turning to the group consolidated results for 20 14. If you look at sales, it's up 4% as you can see on the slide.
And North America is the major contributing factor. If you look at the shipments, we can see that we shipped 203,000 trucks at plus 1%. 61,000 construction equipment that's decreased by 13%. 8,800 buses decreased by 2% and engines from Penta 33,000 reduction by 7%. All these comparisons are made with the prior year.
So 2014 was actually a year of lower or deliveries on the same level. The operating profit went from €7,900,000,000 to €8,400,000,000 But the operating profit was severely affected by the reserves that we had to put aside for the EU competition investigation of €3,800,000,000 We view this very serious naturally and we cooperate fully with the European UK. That's unfortunately all I can say today as it's ongoing and also secretes. But when the commission comes with their decision, we are going to return to readdress this issue Generally, naturally, the question on how we conduct business is imperative to us. For example, during the past 3 years, we've trained more than 45,000 of our employees in the area of competition.
And all employees have also gone through and are going through education, training in our very stringent code of conduct. If you look at the results without this reserve for 1 on, you can see that the operational results has increased by 28%. What's happened is we've got an improved underlying profitability. We also got the fact that the measures that we launched in 2013, 2014, we now start to see fruition of these. We've also had a very strong focus on cash flow during the year and we can see that it's moved increased from 1,500,000,000 to 6,400,000,000.
And that means among other things, we've sold non strategic assets, as Karl Henrik mentioned, strong focus on our inventory levels. And you can also see that we're coming out of a period with very heavy investments being made. And that period is to a major extent behind us. Lower investments at this time also affects the cash flow positively. If you then delve into the truck business, we can see, I look at the sales up 7%.
But maybe important to see that number of delivered and that's primarily due to that we've got better margins in Europe with the new product. We have high volumes and much higher gross margins in North America. We have lowered costs due to FX streamlining measures that contribute positively. And we've also seen during 2014 that we managed to increase profitability on the aftermarket. So 7% sales up and 38% profitability improvement.
When it comes to Construction Equipment and Other Development, we see sales reduced by 1%. But the number of vehicles delivered declined by 13% compared to year prior, which means that we delivered 61,000 vehicles in 2014. Low capacity utilization that this lower deliveries had led to is naturally also affected the results negatively. But on other view you can also see that a negative market mix with continued low demand from the mining sector and also major loss in sales in China because the low demand has affected Construction Equipment segment a lot. When it comes to the other business segments, we can see that all of them have improved from 2013 to 2014 buses from a loss of almost €200,000,000 to a profit of almost €100,000,000 pent down from a nice operating profit, €6,000,000 to €6,000,000 increased it by 16% to €729,000,000 All the financial services also Goodyear, 13% operating profit gain from €1,500,000,000 to €1,700,000,000 When it comes to buses and Penta, we can see that both these segments have been positively affected by good product mix and market mix compared to the year 2013, good cost control and also very competitive products.
When it comes to financial services, we can see that we've made record in new lending during the year and we've also had very low non performing credit which has also improved the results.
We see clear improvement here. We are heading in the right direction and we can see that all the work we do translates into improved results. But naturally, we are not just as Kilm Henrik said satisfied with the group results because we do not achieve the financial targets set by the a growth of approximately the same level as our competitors, just shy of 4%. When it comes to our position in terms of profitability, we remain in the 6th position, the same position as last year. But I think it is worth saying that if we exclude the reserves for the EU inquiry, we would have been in 4th position, which means step in the right direction, but not where we need to be.
When it comes to construction equipment in Penta, due to the huge decline in China above all, we see that we do not achieve our targets and we remain in position 7 which is the same as last year. I still feel it's good to see and I keep coming back to that that this work is showing us results. And for that we're very grateful for our employees because 2014 was not an easy year. We've taken a number of tough decisions and implemented a number of tough measures. And as we said before, many of our employees had to leave the group throughout 2014, but all employees have done an amazing job.
If we try to translate this work into some kind of figures, one very easy way of looking at it is to see what is our profit per truck, what is our profit per sold truck and compare it to the year before. And we can see here that when it comes to trucks, we see an increased profitability of 36% compared to 2013. Volvo Penta is up 25%. Buses has gone from loss to profit which mathematically makes it very difficult to give you percentage, while we see that Construction Equipment has had a very tough year as I've already mentioned. So honored shareholders, we are now beginning to see the end of this transformation.
The organization is in place where the efficiency program is proceeding according to plan and we are increasing our market shares. Everything we've done in 2012, 2013 2014 will naturally be brought with us into 2015 because 2015 is the year when we will take a huge step and close in on our competitors' profitability because we have the new competitive products and we are entering 2015 with a significantly lower cost base than we had in 20 4, 2013. And with that, the Volvo Group is well equipped to meet the future. And compared to our competitors, we have a number of unique assets. We have well invested product programs.
We have amazing brands. We have a unique world leading technology. We have a well invested industry system and we have a retailer network that is on par with any other competitor. But most important of all, we have more than 100,000 dedicated professional employees who every day give their all in order for us to achieve our targets. There is a lot of work that remains, but I will reiterate we are going in the right direction.
Life doesn't end, of course, on the 31 December 2015. We will naturally continue working on improving our profitability after that date. But next phase will be more about specific targeted measures rather than the large overarching restructuring programs. And I am absolutely convinced that we have everything that is required for the Volvo Group to be one of the most profitable companies in our industries where we operate. Thank you very