That's the team, shareholders, ladies and gentlemen, you are warmly welcome to Lisebergshallen and the Annual General Meeting of AB Volvo. It's so nice to see so many of you here today despite the nice weather. My name is Kina Wileke, and I normally work for Volvo Media Relations, and I will guide you through the first part of this event. You who have been here before, you will notice that it's slightly different this year. I thought we'd start by welcoming the Volvo President and CEO, Mr. Olof Persson. [Foreign language] Du fick en applåd. You were given a round of applause. Isn't that nice, Olof? Your first AGM as the President and CEO. I thought I'll ask the mandatory sports question. How does it feel today?
Great. Lots of fun, but a little bit nervous too. A first meeting is always a first meeting.
[Foreign language] Och för bolaget. Why is this an important day for you and the company?
I think it's a very important day. It's the day on which we see our shareholders, we bring up important issues, make major decisions, and it's also a way of tying up the loose ends from last year in a formal, solemn, and good way.
[Foreign language] Ja . As we usually do, as per tradition, we are going to present the Volvo Technology Award. What is it this year?
This is the 25th year in a row we've been awarding the prize since 1988. The prize exists for more technical development and the energy for innovation in the Volvo Group, to award it to someone who has made a very good development innovation during the course of the year.
[Foreign language] En härlig. What technical progress are we going to reward this year?
[Foreign language] Hjullastare.
It's about wheel loaders and about what we call the OptiShift. The OptiShift is a series of different patents, there are two here, that reduce fuel consumption by 20% and which makes our wheel loaders move more smoothly, change gears faster and better, and not least important, quicker acceleration, which is very important to our customers because it makes the productivity and efficiency of our machines better.
What do customers say to you when they talk about the OptiShift?
They're overwhelmed, although I shouldn't really be the one to tell you that. Let's listen to what a customer has to say.
We have a machine digs material out of the ground, puts it into a stockpile. I have to take it from the stockpile and feed it into a hopper. [Foreign language] På Semex Materials går en L221 med OptiShift i krävande produktion sex dagar i veckan.
25 OptiShifts go six days a week, under very demanding circumstances, and can move at least 600 m and go. It's a perfect job for a lockup machine.
On the ride, when it comes in because it's dropping your engine revs lower, you can feel the gear shift so smooth, and you get a light come on the dashboard telling you that the transmission is working properly. It's really a comfortable ride and so smooth. It's a privilege to drive. It's a pleasure.
[Foreign language] Semex Materials och våra kunder.
For Semex Materials, the new OptiShift means not just higher productivity and better comfort for the driver, we can also note a real improvement in fuel consumption.
250 L a day. Now I'm using 190 L- 200 L. It was about 50 L a day savings.
Some thoughts for... As we said, two patents so far. Olof, isn't it high time that we receive our award winners?
Absolutely. Esteemed shareholders, ladies and gentlemen, it's an honor for me to award the 2012 Technology Prize to Björn Brattberg and Sven-Åke Karlsson. Please come up on stage.
Here you are.
[Foreign language] Jag gör så här, Björn, att jag... Björn, I'm going to ask you, fuel economy improvement by 20%. How did you do that?
It's a harmonic piece of machinery. The driver has the ability to take his foot off the accelerator and you get very smooth movement and get things done in exactly the right time. That's how you save on fuel. You make it sound really simple, but I know it isn't. No, it's not all that simple. Sometimes you succeed. You've managed to succeed together with Sven-Åke and several others.
Sven-Åke, this is not the first time you were an award winner?
That's true. I received the award in 2004 as well, but then it was together with other people. This means that you belong to a very small and exclusive group of people, a maximum of two or three persons. Yes, it's very flattering.
Last time you didn't come here. What happened then?
I think I was, I was on holiday, actually.
I won't blame you for that because taking a holiday is almost as nice as getting the Volvo Technology Award.
If I had known what it would be like, I would have been here, of course.
You have retired, but how many hours and years did you spend on the OptiShift during your career?
It's a bit difficult to say. It was run as an ordinary project, but when it was started up, there was new technology development, and it takes some time before you get all the bits in place. You have to apply for a patent because patents are involved in this as well. It takes about three to four years before everything is settled and accepted. Before it's done, you can't run the project. This has been going for about 11 or 12 years, and we are very happy about this.
Björn, I would like to do now what we do at the, or what they do at the Academy Award ceremony, and the floor is yours.
My name is Björn Brattberg, and I come from Volvo Construction Equipment in Eskilstuna. It's a fantastic feeling to be standing here today together with my colleague and my mentor, Sven-Åke Karlsson. We are deeply honored, and we are grateful and proud that we are the recipients of this award. Of course, we haven't carried out this project all by ourselves, but it's a large group of competent and committed and skilled employees who have been working together with us. They are specialists within the fields of engines, powertrain, and hydraulic technology, powertrain control, and vehicle analysis.
I'd like to mention in particular our project leaders, Stefan Forsberg and Ole Winroth. Without their firm and competent leadership, the OptiShift would never have been turned into reality. Wheel loaders are very special machines in which the features of trucks, loaders, and excavators have to be included in one single piece of machinery. That's why it's so important that this machine, through the OptiShift, can adapt itself to work just as well during excavation as during high-speed transport. Volvo has for long been in the top layer of loading equipment manufacturers in the world, and we are going to stay there. For many years, a whole branch of industry has been trying to develop a lockup function for wheel loaders without succeeding completely. I dare say that with the OptiShift, we managed to achieve that goal with user-friendliness, comfort, and fuel economy in all possible applications.
For that reason, we now look forward to the future with great hope and confidence. Thank you so much.
Olof, I have a question for you. This is the second year in a row that the Construction Equipment Division gets this award. It just so happened that you were the head of the Construction Equipment Company up until the turn of the year.
I have to say I had absolutely nothing to do with this decision. I'm innocent, but I'm not surprised because while I was working at Volvo Construction Equipment, I could really see what committed engineers we have and how good they were at spinning new ideas. I have had the advantage of being able to go and visit the other business areas as well for some time, and I can tell you with great pleasure that the same commitment, the same sense of purpose is there permeating the group as a whole. And until late.
We are going to conclude this part with a picture of the award winner. Could you please stay in a group on the stage? Thank you. think it is Björn Brattberg and Sven-Åke Karlsson.
Let's give Björn Brattberg and Sven-Åke Karlsson another round of applause. Thank you so much. Jo, Olof, det har hänt mycket under.
Olaf, a lot has happened in 2011. It's been a record year in many ways, and you are going to talk about the details in just a little while. Could you please say a few words about the news that we released yesterday?
The news? Yesterday we released the news of a program for young people, the aim of which is to give unemployed young people between the ages of 18 and 22 a one-year training program at Volvo with both apprenticeship opportunities and theory. Yes, thank you. We're very pleased about this. It's both a long-term investment on our part to see to it that we have a supply of competent young people for the industry in the future, at the same time as it's also about trying to reverse a trend. A trend we've seen having to do with young people's attitudes toward working in industry. The trend has gone in the wrong direction. We're going to try to trigger new interest and improve our identity and our image amongst young people.
You said a small attempt. We're talking about 1,200 young people, three years, and a lot of money. It's not a small project.
No, in a way that makes it something that's not such a small attempt. It's a long-term investment to which we're really looking forward.
[Foreign language] Tack, det var mycket händelserikt.
2011 was a very eventful year. I'd like to give you the floor now, Olof, to talk about it.
Thank you very much. Of course, it's a very special day for me today, standing here before you shareholders for the first time. It's with both pride, pleasure, and humility that I can say that I've had your confidence and the great advantage of taking over a company that's as well looked after as the Volvo Group. Before we move into the formal proceedings, I'd like to give you a bit of my own perspective on 2011, taking you along on a bit of a geographical tour of the world, around the world. I think we can begin by concluding, as one ought to at an AGM, that 2011 was our best year ever. I think you can put the word "record" together with many of the things we're presenting: net sales, profits, operating margin, and other things.
It's a kind of a receipt to me concerning how much excellent work all the Volvo employees all over the world have done, as well as all the good decisions made by my predecessors over the years. The Volvo Group today is in a very strong position in many places in the world, and that's no coincidence. It has to do with a number of strategic choices. I'm sure you'll all recall the decision made to concentrate on commercial vehicles, isolating that area a bit. In the last 10 or 15 years, we've also expanded enormously in terms of strategic acquisitions on new markets with new products. We were also early in terms of investing in environmentally adapted technology, which turns out to have been just the right decision, as we could see in 2011 and will continue to see in the future.
The results have been that we have a foothold both on our traditional domestic markets, as well as having grown and got a really strong foothold on the emerging markets. I'm going to give you some examples from different places in the world in just a few minutes. I said this was going to be a little tour of the world, so let's start in North America.
It's 6:19 A.M. and you're listening to Morning Edition on WITF 89.5 and 93.3.
I'm thankful that I have a job. There was a long time that I didn't have a job, and it was a very stressful time. Just knowing even if you're working more than sometimes what you want to work, you know, overtime-wise or whatever, it's still great to know you have a job.
During the recession, James Thomas was laid off for two years. However, as a result of Volvo Construction Equipment's $30 million investment in their Schippensburg plant, they were able to offer him a position. Now, a year later, he has just been promoted to Team Leader.
It was a very stressful time being laid off. It made me feel a lot better knowing that I was going to work for a good company, a good solid company. They had had a few hard years, but so did everybody else. Everything I've seen so far has shown me that their business is definitely growing. I think it was a wise decision to go there.
Anytime a company and a company with the profile of Volvo makes a decision to consolidate and expand their manufacturing presence in any community, and we're blessed that it's Schippensburg, it's going to have an enormous impact. I look at our economy as an ecosystem, and we need the Volvos of the world to drive that. As much as we talk about the need for, you know, and the growth of small businesses being the backbone of our economy, without large businesses like Volvo, there's no need for those small businesses.
This film, as you saw, is from Schippensburg, Pennsylvania, and describes a bit of the feeling that I also experienced on my trip a couple of weeks ago. A sense of recovery and optimism that's starting to come onto the American market in the North American economy. We've had a number of tough years in the U.S. We haven't seen this feeling of optimism, but now in the market where we work, heavy-duty vehicles, it's increased by 52% between 2010 and 2011. Both out of a need to renew the fleet and also because of a sense of growth. The U.S. is a very important market for us, the third largest with some 19% of our manufacturing. It's been a home market for us for many years. An important thing about this market is that with our products, we will be taking market shares and growing.
I'm very pleased to be able to tell you in terms of market shares that we had a very good year last year, increasing by 2%, both on the Volvo side and on the Mack side. As you see, we've grown substantially in the U.S. over the last 10 years, actually by about 50%. You might ask yourself what the engine of this success is, and of course there are a number of explanations, our good products, our good dealers, our good production, but we've also seen a change of trend in the U.S. The situation is more and more so that the customers are choosing our engines and our gearboxes for their trucks, which hasn't always been the case. The optimal connection of gearboxes and engines gives better fuel economy, and that's something that our customers have really begun to discover.
On this slide, you see a Pitts Ohio truck. I met a representative of Pitts Ohio a couple of weeks ago. They bought 10 Mack trucks and are considering buying another 110 now. I asked them why, and they gave us exactly that example, the combination of engine, gearbox, fuel economy, and quality. That's what we're looking for, they said, and that made us decide to buy your products. Having a market as a home market, of course, requires investments. We've made lots of investments in the U.S. in the last five or ten years, and we're going to continue. The largest decision made in 2011 was about Schippensburg, where we're going to be building up construction equipment in a way that makes it possible to manufacture many more products there in Shippensburg, which has a lot of advantages. One, coming closer to the customers.
Two, that we'll be able to reduce our lead times and react to the market faster. We will reduce our currency exposure because we'll be using more American suppliers and subcontractors. We've also invested in a gearbox assembly plant in the U.S. The North American market as a whole seems to be recovering, and we're well positioned, and we'll continue to invest in that market in a future-oriented, excellent way. Moving along south, this brings us to South America. South America has grown. The whole region is in a growth phase. You can see that we've done really well in South America, particularly in Brazil. Between 2000 and 2011, we grew by 575%. This is a market that's growing in terms of the number of trucks. We saw a 6% increase last year. We've got a market share of 17%, which is up 2% from the previous year.
Here too, we've shown that we can succeed in gaining market shares and can make ourselves a good position on the market. We've done so well that in the real heavy-duty vehicle in Brazil, Volvo is the market leader today in Brazil. We've also worked very hard on developing a competitive structure in Brazil. We've invested in production, in sales, in purchasing, and all the other necessary functions for the support of the market. This is really starting to pay off. It's with pride that I show you this slide. We show that we were the best employers in Brazil in 2011, had the best brand image, most customer satisfaction, and we were, as I've said, market leaders in terms of heavy vehicles.
All this means that we have really accomplished a lot in South America, particularly Brazil, and I can tell you that we now consider Brazil a new home market. When it comes to technology, Brazil and South America are really at the forefront of developments. This year, Brazil has the same emission requirements as Europe, the Euro 5 guidelines for emissions, and the cleanliness of our engines or of engines. We had the largest order for hybrid buses last year from Brazil, from Curitiba. These two things together indicate that what we used to call export markets are now becoming home markets, domestic markets. Technology is developing rapidly on these markets as well. The Brazilian market is a segmented one.
From the end of 2010 and through 2011, we introduced what we called a multi-brand strategy on construction equipment in Brazil, which means that beyond the Volvo brand, which is our key premium brand, we've also introduced the brand, the Chinese brand SDLG in Brazil. We're doing this in order to ensure that we cover as much as possible of the Brazilian market. This has turned out to be very successful. We've gone from not having any place on this mass segment to being the leaders in this mass segment in Brazil in one year. 80%- 90% of the customers who buy our Chinese brand would never even have considered buying a piece of Volvo Construction Equipment. There's no what you would call cannibalism in this area. It's just a very interesting concept, multi-brand.
Moving east to Europe, we can draw the conclusion that there is a lot of uncertainty in Europe, both as a market and an economy, but we have a strong customer focus and environmental focus. The market was very progressive in 2011 with 0.5%, and we've managed to gain market shares as well. The Volvo brand of Volvo trucks has done an incredible job to increase the market share by 2% during 2010. Renault has done a very good job as well to keep their market shares, given that the southern economies have looked the way they have, which means that Renault are normally very strong there, and they've really had to fight to keep that position. When it comes to the environment and alternative fuels and powertrains, we launched during 2012 a number of new products in the market.
Perhaps the major novelty is the new 900 platform for buses, which the customers can get both with hybrid fuel, ordinary diesel, or gas. This has turned out to be very successful. We have sold hybrid buses. We have as many as 600 in the order book, and we have a world-leading position in hybrid buses. We've also shown that when it comes to alternative fuels and drivelines, we can also have a solution for long-distance transport. During the year, we launched a methane diesel truck for long-distance transports. If you run that truck on 70% gas, you can reduce CO2 emissions by 70%, but on the condition that you run it on biogas. Another concept is all-electric, and Renault has launched another model in the all-electric range of products.
We've seen in our cooperation projects with our partners that this is something that is becoming more and more common for smaller vehicles, especially in cities. I think what we should do now is take a look at what it could be like during the early morning hours in Lyon, in France.
When you say eco-drive, I can see three main advantages. The first one is that there is absolutely no emission, especially the greenhouse effect that is a problem for the Earth. Secondly, I would say that the refueling of this vehicle is very cheap, only EUR 2/ 100 km. The third point is that it's about noise. We have been reducing the noise by almost 10% so that this vehicle could be used for early morning or night duties, such as garbage collection or goods delivery.
This is a very exciting development by Renault, and they are well ahead when it comes to this kind of development. If we look at the different solutions that we offer, we have a very clear strategy. We have not put all our eggs in the same basket. We think it's premature at this point to say which technology will be the winner in the long run, both when it comes to the type of fuel and what type of powertrain that will be used in tomorrow's vehicles. I think we will see different solutions in different parts of the world.
We have said that if we can see a commercial opportunity, we keep up the development in all different types for all different types of solutions because we want to be able to support our customers, and we do this by using our global network and our knowledge about different kinds of technology that is available today. Asia then, which is a new home market for us. 736% growth since 2000, which is a fantastic figure. We have grown in the way that we've had good organic growth with our own brands. We have also been highly successful in terms of acquisitions and with our cooperation partners. Not many know that together with our cooperation partner, Eicher in India, we are the third largest manufacturer of commercial vehicles in India, and we are absolute market leaders in India in medium-weight trucks with a market share of 35%, 30.5%.
The Indian share of our turnover has gone from 7%- 24%. We have also made important inroads into the Chinese market with construction equipment, together with our joint venture company, Lingong, and their brand is called SDLG. They are today, together with Volvo, the largest player in the field of construction equipment, specifically wheel loaders and excavators in the Chinese market. The Chinese market for construction equipment is as large as the rest of the world taken together. Volvo and SDLG are the market leaders in that market. That wouldn't have been possible, of course, without an extremely good cooperation climate and a good joint venture climate together both with Eicher and SDLG. The Asian market is a market that we've invested in a lot in the production there.
In India, for example, we don't only have production, but also technology and construction included in the growth that we see there. In Pithampur, we see how it's developing as a center for the manufacturing of medium-weight trucks. We have an installed capacity of managing 100,000 engines per year in the plant in Pithampur. These are engines that will be used in tomorrow's trucks and buses all over the world for heavy and medium-weight vehicles. By cooperating with a company like Eicher, we also have a fantastic opportunity to develop our product range. I've said that we are very strong in the medium-weight segment in India, but we need to cover the heavy-duty segment as well. By having such a cooperation partner, we can take advantage of volume opportunities by using Volvo competence and Eicher production facilities.
In China, during 2010 and 2011, especially in the field of construction equipment, we have invested enormously in production capacity. The market has grown like never before, and we've had to introduce models and attack new markets. The most recent development is that we're also investing in technology and development. The center we are building in Yunnan now is very interesting because it means that Chinese constructors are now going to work together with Swedes, French constructors, and Japanese technicians to develop the machines of the future for this field or for this application. I believe that this will be a major generator of ideas for the future. The Volvo Group fits in nicely in the world as it looks today. We have a very strong position both in our mature home markets and in the growth markets.
We have global structures and networks so that we can act as a real global player. We were very early in investing in environmental technology. We are well ahead in that field, and we are also world leaders in many other technologies in our business. The conditions are excellent. If we look into the future a bit, we can see that Asia and the Asian markets will continue to grow, not only as production markets. They will also take up more place in product development and technology, and they will become a part of the global Volvo platform. We will also see that the financial centers, previously it was Europe and North America, will now be supplemented by finance centers in the Asian countries and in South America.
We also believe that the green revolution or the alternative fuels and drivelines is something that will continue and be enhanced by stricter legislation and increased prices of fossil fuels. It's, of course, very important in a situation like this that we never let up and rest on our laurels. The Volvo Group has never done that, and we never will. We've also made sure now that we are taking some new steps. We've introduced a number of new developments over the past six months. We've established a new division. We have laid our new financial objectives. We have a new organization, and we have a new management as well. Sometimes I get the question, is it really necessary to make all these changes? Wasn't it good as it used to be? My answer is very clear. Yes, it was good before as well.
A company that stops developing and says everything is okay, a company that is not prepared to change and follow the technological and financial reality and the reality of our customers is not a company for the future. That is why it's so important that we keep moving and that we keep making the changes that are required to really use the full potential of the Volvo Group. I can assure you, esteemed shareholders, that there is fantastic power and potential in that. Last but not least, I'd like to thank all our employees who've carried out fantastic work over the year. Without your contribution, we wouldn't have been able to put the word "record" in front of everything we've done. I'm also very excited about our future voyage. I look forward to an exciting year, but also exciting years in 2013 and 2014.
A lot is in the pipeline, and there is a lot of energy. Shareholders, I hope that you can feel this energy and the joy and the passion that I and my management group and the whole company have so that when you will look at Volvo in the future as a fantastic investment. Thank you.
[Foreign language] Tack så mycket, Olof. Thank you, Olof. I thought we'd talk a bit about the new organization. This is something that we have spent a lot of time and effort on over the past six months. I often hear you say that we are going to utilize our full potential. What do you mean by that?
One important aspect of that, in my view, is to think like this. For many years, we've been incredibly successful in our growth strategy. We've acquired and integrated any number of excellent brands. Today, in the Volvo Group, we have a brand portfolio that's absolutely unique. In that respect, I think we can maximize, we can optimize each brand in its own segment as much as possible in order to grow more and use the potential we have in the Volvo West.
As we saw in Brazil with Volvo Construction Equipment.
Yes, on the truck market too, we've got different segments in Brazil. We have to ask ourselves, should we really just have one brand in Brazil, or is there an opportunity to introduce more brands to take more market shares in Brazil? That's what we're working on.
What's the answer to that then?
The jury is still out.
We should allow ourselves to be visionary. What would the Volvo Group look like in 10 years?
I can't tell you that, but if I have the privilege of standing here 10 years from now, I think I'll be talking about Asia. I think I'll be talking about the new technologies in terms of the environment. I think I'm going to talk quite a bit about Africa as well.
That was the continent that wasn't on the map. What are the future prospects for this enormous continent?
I think there's fantastic potential in Africa. We're already strong in North Africa via the Renault brand, but also with Volvo. We're strong-ish in Southern Africa. There is all of Sub-Saharan Africa where there's a huge amount of potential. I think the coming years are going to be very interesting there.
Olof, when I saw your pictures, I couldn't help but notice these fantastic figures, 600%, 700% in South America and Asia over the past 10 years. If other markets are doing well, how would that benefit us here in Sweden?
I think we must always bear in mind that we work in a global network. When we manufacture a truck in, say, Asia, that generates work here in Sweden as well, extra opportunities, because we need competence and skills to develop products for other markets as well. Generally speaking, I think we can say that if we create three jobs in China or India as part of our global network, then that also generates at least one extra job in Sweden. It's a win-win situation working in a global network.
What happens in the rest of society when Volvo is doing well?
Of course, being the largest private employer in Sweden, with just over 30,000 employees today, means that we do bring a great influence to bear. 2011 was a year when we had the opportunity to hire some 3,000 people in Sweden. There are studies showing that every job in the automotive industry or the vehicle industry creates another three or four elsewhere in society. We do bring a lot of.
[Foreign language] Jag tänker avsluta med. We influence, but we also have responsibility. I'd like to conclude by talking about a piece of news that I saw on television last week when there was something about Volvo not paying tax. Could you comment on that?
There are some important things to be remembered here. First of all, last year we contributed to the Swedish car for over SEK 8 billion, and we paid corporate taxes all over the world of over SEK 4 billion. At the same time, you have to remember that Sweden accounts for some 5% of the turnover of the Volvo Group. Looking at a truck, for instance, produced in Brazil by Brazilian workers with materials supplied by subcontractors in Brazil and sold at the profit on the Brazilian market, then of course the Brazilian tax authorities have a right to think that we should pay tax there.
My interpretation is that you didn't really agree with the news reporter then.
[Foreign language] Vi kommer en stund, då kommer.
We will come back in a little while and talk about the financial results. We've now arrived at the more formal part of the annual general meeting. Thank you so much, Olof. Right, a round of applause.
[Foreign language] En liten applåd säger man inte nej till. You could never say no to applause. We are going to finish at Hissingen, the island on Arendal, and the Volvo Museum. If you haven't been there, you can go there and look at buses, trucks, and cars from the 1920s and onward. 67,000 people visited the museum last year. It is very popular, and many of the visitors are foreign cruise passengers who are visiting Gothenburg.
Easy access, and it's accessible both to grown-ups and to children as well. For people that have no real engineering interest, it's still an attractive exhibition. The way that the engines are laid out and cut open are especially, they just show you the beauty of a modern engine, superb.
It's fantastic. Everything is just glowing. It's probably one of the best that we've ever seen.
The visitors are extremely positive. They see the Volvo products, they enjoy all our fantastic history, and they learn about Volvo engineering, our technique, and our organization.
Right, so impressive. I'm not a truck person. You know, some people love trucks from the age of three onwards, you know, but even I've been impressed with the trucks. The sheer size of the trucks, the engine size is enormous, and the work that they do, and the quality of them, the fact that they'll run for hundreds of thousands of kilometers with just minimum maintenance, very, very good indeed, very powerful machines. They too are things of beauty. I like trucks and buses for that reason. I've been impressed. I'm impressed with them, I must admit.