Everyone, to this Volvo Capital Market Day. As I discussed with many of you during the release of the third quarter, I will today focus my presentation around the new organization, around the financial targets, and a little bit looking at what that means to us as a company. I would like to introduce some people before we start. We have with us here Mikael Bratt, present CFO, and Anders Osberg, who then will be CFO. They are standing up as well, yeah, from the 1st of January. Also, Christer and Pär is here for support. Mikael will not make a presentation. I will do the presentation throughout. Of course, they're here also then for the Q&A session after the presentations. I'm then starting with a quite sort of self-explanatory question. The world is changing.
The story I'm going to tell you today is a little bit about what I did between the 1st of May and up until the announcement of the reorganization. What were the thinking? What was the analysis behind? Why did we come to the conclusion of the new organization then in combination with the financial targets? It actually started here with the world is changing. It's changing in a way that we will create future challenges. That was sort of the first step that I took. What kind of challenges do we have as a Volvo Group long-term in the environment we're working with? Here you can say that we, of course, can list a long list of different drivers when it comes to what will impact us as a business over the long-term.
We have increasing population and middle class then leading to increased consumption, increased transport needs, et cetera, et cetera. We're talking about climate change, which is then coming into not only the way we all live on this planet, but also, of course, is translated into what kind of technology do we need to be producing and developing for the future. Coming back to the scared of commodities and raw materials, I mean, this is something that is more and more, of course, coming to us. Something we also need to make sure that we prepare ourselves for and also make sure that we are coming into and also looking in the way those changes will impact us.
Cities, it's going to be a major issue when we talk about the growth of population in major cities and what aspects will that have to us in terms of efficient and sophisticated logistics. Also, of course, CO2 regulations, environment regulations. Of course, then in terms of what kind of vehicles we need to produce and develop. The same goes for the Asian growth when it comes to we all see the place that Asia is taking both in terms of competitive entries, but also in terms of cost and market positioning. By defining this, and these are well-known, I will not dwell too much about those future challenges. We actually then looked at, based on those future challenges, we need to have a vision going forward. That vision we then worked on and concluded on like this, where we have highlighted a few words on this one.
The Volvo Group's vision is to become the world leader in sustainable transport solutions. Sustainable is the broad definition of sustainability, the one that not only takes care of the environmental, but also the social, the economic aspects of sustainability. We want to create value for customers in selected segments. I think it's important to point out the selected end segments, that we select the segments we want to be in. In those segments, we do then create value. We want to pioneer products and services for the transport and infrastructure industries. That is about innovation. It's about making sure that we are one step ahead when it comes to new technologies, serving, and also making sure that we face the future challenges we talked about. Our core value will always be there in quality, safety, and environmental care.
Core values that have been with us for many, many years and will also in the future be with us. Then taking real advantage of our global scale when it comes to working with energy, passion, and respect for the individual. If we then take the future challenges, the group vision, and also then the group wanted position, this is a logical sequence that we then have worked on. When it comes to the wanted position, we then transform this vision into these areas. When it comes to the profitability, and that is, of course, very much in line with what we have said in the financial targets as well that we have got from the board, we are among the most profitable in our industry.
When it comes to the customer and business partner, and this is very much about how we deal with our distribution, I will come back to that a little bit later as well, but we are our customers' closest business partners. We have captured profitable growth opportunities. That is, of course, one area that we are looking into. We have talked a lot over the years about soft products. We need to look into also in the future what other revenue streams can we have that are created around our products. I used to talk about the revenue streams around the truck, like circles. We have the truck itself. We have spare parts. If you look at the total and wider circle of a truck, it's actually generating a lot of revenues, some of which we are into and some of which we are not today into.
We need to look at making sure that we have captured profitable growth opportunities. It's, of course, also related to geographical areas and different segments. When we say about the, you remember the pioneering, and if we translate the pioneering as a vision into the wanted position, we are focusing very much on energy-efficient transport solutions. We have done that in the past with our new technology coming out. We will, of course, in the future also then focus on energy-efficient transport solutions and technologies that are helping that to come through. Again, then taking care of our sort of global reach and making sure that we benefit and also take advantage of the vast majority of people that we have around the world, that that can contribute to a true global company and global performance.
If you don't take, and this one is sort of going through the bases, and that was very important for me to have those bases because this is the foundation. I can talk hours and hours about this foundation. Of course, I want to speak more about the questions that are raised. Because when I saw then that we came to the group wanted position, I asked myself three questions. One, do we have the right customer offering to meet the wanted position? Two, do we have the processes and structures in place to meet the group wanted position? Thirdly, are we really fully utilizing the potential of the Volvo Group? I will walk you through now one by one those questions and give you some answer of the conclusions we did.
If we start with a customer offering, and I think this picture is quite impressive, actually, because this shows many things. One, it shows the enormous asset that we do have in our brands. Those assets that have been acquired and integrated into the group primarily over the last 10 years. We have the Volvo, we have the Renault, we have Mack, we have UD, we have Eicher. You can also, in the wheel order you see down there, add the SDLG brand in China and elsewhere. This is, of course, one way of looking at the customer offering. Yes, we do have the customer offering. Another way of looking at it is the technology embedded in those brands.
There again, it's quite impressive to see that we not only have the broad range of technology that serves all the parts of the world, but we also are very much ahead of competition and the industry in many areas of the different technologies, primarily technologies then relating to our core values. We also have a breadth and a depth when it comes to customer offering of soft products. We have the financial services, which then is now more and more a global player and also adapting itself and increasing its business. We are in both goods transportation and people transportation, which is, of course, very important if you go back and look at what I said about the megacities and other things that come in there. Also, if you look on the truck side again, you have the whole spectrum from small, medium, up to large trucks.
If I would sort of summarize the customer offering and answer the question, do we have the customer offering needed in order to meet the group wanted position? I think basically we can say yes. Of course, there still needs to be development. Of course, still it needs to be monitored and also developed into the future. In general, you can say with that enormously good work that has been done over the last 10 years, both building the brands, building the engine platforms, building the technologies, I think that we definitely have a customer offering that then would be, for instance, help us to become the closest business partners to our customers. This was a very important conclusion that I draw. It's also one of the major benefits that we have seen over the last 10 years in the build-up of the Volvo Group as we see it today.
Next question I ask myself then, do we have the right structures and processes to actually meet the different requirements that we have? In order to answer that question, I took this slide because I like it so much, and specifically the heading. Every organization is perfectly aligned to the results that it gets. It's all about this sort of star picture, as you can call it, with strategy. You have structures. You have processes, rewards, people. You have this in the middle called the culture. All this is sort of interlinked into the organization, which then drives performance and drives behavior. I truly believe that this heading is probably true for all companies. When I then looked at the organization as we have it today, we can conclude that the matrix organization that we have today has served us very well over the last year.
It is an organization where you do two things. One, you can easily integrate companies that you acquire. It's easy to then integrate them into the different levels when you talk about logistics, when you talk about parts, when you talk about IT, because you have a platform that is going in the matrix level, which means that you actually can do that quite easily. That has served us very, very well. As you can see there, the model we have had is that your profit responsibility is both on the sort of horizontal and the vertical line, which, of course, then also drives performance. It also drives a lot of interfaces because you have those profit and loss interfaces throughout this organization. I would say very clearly that this organization has been ideal in order to build the Volvo Group as we see it today.
Now we have the asset that we have, and we need to look forward, of course. Before jumping into conclusions, we also looked at how are our processes and how do we actually work in the company when it comes to these major level one business processes: brand positioning, product strategies, planning, development, sourcing, assembly, and sales and marketing. Within a matrix organization, you, of course, get a lot of involved parties. You have, as you can see, a lot of interfaces that are included in each and every phase of the processes. That's a sort of a definition of a matrix organization where you have those cross points coming all over. I would like you to sort of keep this picture in mind when we then take a look at a little bit what we're trying to do with the new organization.
I also asked the top 150 managers what they thought about the improvements that we could do in the organization, given the situation we are in today. What would be the major focus from going forward in brand management, customer management, and internal efficiency? If we then start with brand management, the feedback was, and it was very much in line with my own findings, is that we need to take a look at the brand and the brand positioning. This is a key element in the new organization, which I will come back to. We also had to clarify the brand responsibilities with the brands and the business areas divided as they were. Of course, each and every one had a very clear ownership of the brands per se. The question is, how do we make sure that we get the maximized brand positioning for the total group?
It was also quite clear from the 150 top managers, now when we have acquired all these brands and had done the integration, the platform work on engine side and chassis, how do we make sure that we go on and utilize these assets in a better way than we have done before? On the customer management side, one key issue there is to align our commercial focus. This comes very much to the notion that we have reached a critical mass in terms of size and number of brands. Not only on the brand positioning side, but also on the customer management side, we need to align our commercial focus. There were also comments around the structures to improve our already very good customer service and improve authority and accountability more efficiently.
This is also something that we need to, the feedback we got is in a matrix organization, a risk that you have multiple contact points and focal points to the customers. That was something that we got feedback that we also need to address. If you have an organization for 10 years, as we have had it, you are building in some internal inefficiency. That's by the fact that regardless if it's a good or bad organization, you actually do get that. We got some comments around the internal efficiency when it then came back to the complex organization and decision speed, which is also something that we addressed in the new one. The cooperation between the business area and the business units, internal sort of doing and living that you also get within big corporations. You're also looking at the business units.
What is the role of a business unit? As you saw on the slide before, we do have it as profit centers. Again, accountability and making sure that we have speed in our decision process. When I add all this up, I put a red mark and say, no, we don't have the processes and structures in place to meet the future challenges. We need to be with the group wanted position we have put forward. We need to look into and see how we can deal with a process and structure that is in better alignment. Since we have already announced the new organization, you know the answer to it, but I would like to come back to it a little bit more later to describe it more in detail. The final question, if we are utilizing the full potential of the Volvo Group as it is today.
I then started by looking at the new financial targets. You are well aware of them. That was presented now one and a half months ago. That is, of course, a target setting that is now really challenging us to and also requires us to deliver. It's from an external point of view, targets that are very tangible. It's number one. Or number two, it's growth on par or better than our competitors. It's a yearly sort of a tick-off, yes or no. From an external point of view, it's easy. It's also very easy to explain internally what our board is expecting from us, that we have to deliver in or better than our competitors. This is the world that we, of course, are living in. It takes away a little bit about the discussion where in the business cycle are we.
With the previous targets over a business cycle, you could easily run into a discussion when I actually pass the peak and when do we have the bottom. This one is taking that uncertainty away, and we're now focusing on the reality that we are living, and we get a competitive edge too, that we want to be up there on the podium, and not only on the podium, but normally the two places that are highest or the one that is to the left, number one or number two on the podium. How have we sort of delivered on those targets in the past? I would say in terms of sales growth, it depends on what period of time you're looking at. We have been on par. You can see we have been a little bit up and down.
In trucks and buses, you can see now that we do have a growth that is basically on par over the last years. Also in the downturn, we didn't lose out more than our competitors. When it comes to the trucks and buses and the profitability, you can see that we have not been in line. Here is, of course, the big challenge that we have. In particular, you can see that we dropped during the bad times. When you have the drop in the 2009-2010 crisis, we dropped from a four or five position down to an eight. Of course, we come back very, very rapidly up to number two position, which is, of course, due to a number of reasons. One is, of course, that we have sort of reduced our structure cost quite a bit.
Still, we are sort of coming up and down a little bit too fast, and I'm coming back to that a little bit later. Here, definitely, we have work to be done. On the C SIDE and Penta, basically the same picture, yeah. On the growth side, we are on par with competition. We have, as you can see now, lately been a little bit better than competition, mainly driven, I would say, also by our successes in China. By having China and a big part in China is, of course, helping us compared to our competitors. In general, you can say that we are following our on par. Again, here we have the same sort of historical position, a little bit more sort of less volatile. You can see we're a number four or five position. Again, the same principle.
When we really drop into the bad times, we're dropping more than the competitors, and we then drop to place number seven. Again, coming back very nicely after the crisis up to a number two position. This shows me, and when I discussed that internally as well, that we have a leverage issue that we need to address. This is our historical position. Basically, we are very fast in coming back out of the crisis. Then the leverage on the top end of the side, so the top end of the cycle, we don't get the leverage increasing or improving.
What we need to do, and one area we need to look at, is to start to look at the leverage curve for the group that looks more like this, that we can actually build ourselves a better buffer for bad times because we are in a cyclical business by having a leverage curve that actually carries us higher up before it's flattening out on the high side. It also means, in order to sort of make sure that we have more way room, we need to lower the cost. We need to work on both sides, both on lowering the structural cost to get a lower break-even, and at the same time, making sure that we get a leverage curve that is carrying us higher up over the cycles. This one is also something I looked into.
This is then, if I take the profit and loss line by line and see, if I don't sort of just look at it and see, where do I believe that we can improve? This is what you see on the screen here is the conclusion. By taking the comments that we have an asset of brands that is not 100% fully utilized. It's integrated, and we have built the platforms, but we have not yet taken the full step to fully maximize the brands. We have opportunities there. We have a very good distribution, but we also bought on a lot of distribution. Again, improving and developing distribution is probably something that we also, by just working on the footprint we do have, I'm quite sure and certain that we have improvement potential there as well.
Of course, as I talked before on the wanted position and on the vision, new segments and penetrative segments, both from a product point of view, but also from a geographical point of view, I believe that we definitely have potential on the top line growth. I want to send that message immediately. The reorganization that we're going to discuss a little bit later, to me, is very much focusing on actually improving top line. We do have, of course, as in all companies, potentials also if you look on cost of good sales. There, I think that by the split up of the activities we have had in different business areas and business units, by combining forces and really taking advantage of the scale that we now have got over the last 10 years, we do have on the purchasing side definitely potential.
We started a couple of years ago with a Volvo production system, and it's rolling, and it's implemented. We still have ways to go before we can say that we all over the place have a world-class production system. We're working on it, but I think, again, with a new organization, that we're going to have a better focus on that and also more coordination around that. On the R&D side, we're spending a lot of money on R&D. The question I have is, of course, do we have the right efficiency on every krona entered into the R&D? Do we get the right result out on the result of it?
There we have now an R&D 30 program, which is running, where we also see a lot of potential that can be used in either taking on more R&D or actually then streamlining the R&D in which way we want to go. Selling and admin, again, potentials there, coming back to the consolidation of dealer development activities on the back office side, that we're more stringent by having a more sort of overall view on the development on the dealer side. In particular, then systems, which is a big cost for the dealers. Can we do something there? The answer is probably yes. Again, support functions, the business units, as you saw it before, focusing very much on efficiency rather than perhaps the internal profitability.
If I would summarize before I do the cliffhanger and ask you to take a short break, what I did and what we did in a team since May is basically going through the steps in order to create two things. One is a platform based on the vision, based on the wanted position, and they should all be anchored on the main challenges that we do have in front of us. That gives a solid foundation in order to ask the questions about the customer offering, about the processes and structures, and on utilizing the full potentials. This gives me and also the rest of the management team, and that's why I show that the answers coming back on what we want to do is not just an idea that I have been dreaming up.
This is a commitment and also the feedback from the top 150 in the Volvo Group, which also plays into account in terms of stability in the platform when you do such a major reorganization as we're going to do from the 1st of January next year. All in all, the big question is, what do we do then? That is exactly what I'm going to talk to you after this coffee break. Chris, I kept it exactly on 30 minutes. We're keeping the time. I'm going to talk about the answers, what we're going to do, and what it means for the future. Just sort of making sure you didn't forget everything over the coffee break here.
This was where we ended: future challenges, the big trends that we are living in, the new Volvo Group vision, and the new, and as you said, both of these are new wanted positions, answering the questions about customer offering, processes, and structures, and utilizing potential, where we say that we need to focus on processes and structures and utilizing the full potential. Looking at what is it that we're actually going to do, one of these is, of course, a very bad kept secret, and that is, of course, a reorganization. Let me give some flavor to it in terms of the organization. One of the key issues with this new organization is, of course, the focus and the realization of that Volvo Group today is 65% trucks.
That also gives the focus and sort of not tilting, but the focus of the organization has been, and what I will talk about going forward now is very much on the truck side. By doing a functional organization, you achieve a couple of things. The primary is that you get a clear responsibility on different areas. That's sort of self-giving. In this case, we now have three regions whose only responsibility, if you can call that only, is to take care about the customer, taking care about the sales, making sure that we attack the market in the correct way, and they don't have necessarily to think too much about other things in the value chain. I am coming back to that. It is a little bit of a statement with some exceptions, of course. It gives very much a focusing in on certain areas.
If you remember the questions I was putting to myself and to the organization, these are actually addressing in the sales and marketing organization exactly about the brand and the asset of the brand. I have got some questions around this when it comes to sales and marketing and brand ownership. Sales and marketing from the region is then complete sales and marketing and sales responsibility for that region, plus the worldwide responsibility for the brand allocated, as you can see here. That means that the brand ownership and the role of the brand ownership is that you cannot, in another region, do something with a Volvo truck, for instance, in Asia that is not approved by the brand owner in the European organization.
That is to make sure that we have a consistency around the brand and the brand values, the brand promise, the differentiation, and all of that to make sure that we don't slip into regionalized solutions. Other than that, it's a full focus on exactly what they should be doing: sell, sell, and sell. The same goes, of course, for the Group Truck Operations. In there, you will have all the operation activities. You will have everything that is related to production, but also logistics and other parts. That is a complete value chain when it comes to operation, and the same goes for technology. This is what you get with a functional organization in that respect. What we also get here is, of course, the fact that I will be, as you can see, I'm the CEO of the Group. I'm the CEO of the truck business.
If you really look at it from an extended room, I'm also the sales manager because there is nothing in between the regions and so on and so forth. My time, and I will come back to that, will be very much devoted, and the team will be very much devoted to the truck business. The reason why we then put in the business area is exactly that. Within the business areas, the companies underneath the function business area, there we have, of course, a lot of very sort of interesting companies that we want to grow, that we want to make sure that they don't get trapped in a process which is limiting their development and limiting their ability to grow.
Therefore, we have made sure that there is a business area function with full mandate to take care of strategic issues, taking care of investment plans, taking care of operational issues, and run those companies and make sure they develop according to the strategy we have. The same with Volvo CE. CE is reporting to me, but we have the chairman of the CE is then the same person as Head of Business Areas, who can call some. This is in order to make sure that Volvo CE, as you know, has grown substantially. It's a big part of the group now, and we also want to show that it is a very important part of the group. Also, if you look at it from distribution and strategic issues, you see a lot of connections between the Volvo CE and the truck side. This is the one-dimensional non-matrix organization.
To me, this is important. An organization that is one-dimensional with only boxes where you have your boss, you have your salary setting, you have your development plan, but the day you come into work, you start to work in a process. I will come back to that a little bit later. We have done a lot of moving around, as you can see. We're actually moving in the business units now into the respective functions. We're taking away the profit and loss responsibility. We are, as I will come back to, taking away the internal invoicing. We are taking away unnecessary cost allocations. Now we're moving the, if you take the powertrain manufacturing logistic parts, goes into truck operations. You can see that 3P powertrain technology, Volvo technology, Volvo parts when it comes to product support, and Volvo Group NAP then goes into group trucks technology.
If you look at it on a high level, you have the Volvo IT, you have the Volvo Business Service, Volvo Group Real Estate goes into the financial business support. We have a clear allocation now on all activities, and they are then allocated into the respective functions in a cost-based way. This also means that we have created a clear ownership of the processes. If we take the sales to order and sales to order and delivery to repurchase, which is the aftermarket service, it's clearly owned now by the Group Truck Sales and Marketing regions. We have a clear ownership on the processes, and we also have a clear functional organization. These two together mean that you can focus on the complexity in the processes, not the complexity in the organization.
A matrix organization can very easily be, without having a lecture in organizational theory, will over time add on too many layers. You get too many dimensions in the organization before we even come to the processes, and that makes it very difficult to work in. This is two dimensions: flat, one-dimensional functional organization, and then you take the complexity, which you have in the real world, into the processes with clear ownership. Your order to delivery is clearly owned by Group Trucks Technology, and you have the product planning and development process then owned by Group Trucks Technology. We also then put everything that has to do with the business administration and business support into Finance and Business Support functions, so it's all collected there. Again, the whole line of processes is now clearly allocated together with all the resources in the whole company.
If we then look at what this means in terms of simplification on the process structure, this was the picture I asked you to remember. This is where we had the old matrix organization where you do have a lot of people involved in all the steps of the different processes. Schematic and a little bit of a simplification, you can say that in the future, it looks like this, where you basically then have the functions clearly taken care of. Global brand ownerships within the brand positioning and product strategy, and that is Sales and Marketing. You have the ownership of the three next coming steps with the Technology and Purchasing, and then efficient manufacturing and commercial ownership on the assembly. Simplification, simplification, simplification. That is the name of the game when you look into it in terms of describing the processes.
The decisions we are taking then is to basically move decisions into the line organization. We are now moving, we're taking away internal boards. We are running this, and I will come back to that on a review meeting schedule instead of the internal board structure. We have several governance bodies to coordinate group-wide issues that were there before in the matrix organization, have been abolished and taken away. Of course, the decision moves to Executive Management Teams with clear mandates through accountability. What I said before, no internal profit centers, no discussion about internal contracts, no discussion about internal invoicing, we're taking that away. There was actually quite a substantial amount of flow of invoices and internal transactions built up over the years as we've grown bigger and bigger with the matrix organization. We take away all that now from 1st of January next year.
Next step is, of course, looking at what we talked about in the decision-making. What we do now is to put everything in terms of decision-making into either a weekly, monthly, or quarterly rhythm. The most important one is on the weekly, where we're going to have the Group Truck Management Team headed by me on a weekly basis and a weekly rhythm to make sure that we process decisions, make sure that we take the right decisions in time and in order to move it forward. On a monthly basis, you're going to look at the cross-functional, which is then process-related management teams. On a quarterly basis, with 40- 50 people, we're going to come together for two days, and we're going to discuss strategies, strategic issues, brand position issues, portfolio planning issues. We're going to do that on a quarterly rhythm as we go forward.
You have the same on the business areas where we don't also have everything divided into weekly, monthly, or quarterly decision pace. This one is then really to make sure that we increase the pace in decision-making. When it comes to the accountability, and this is very important, and I've got some questions around that, who is responsible for what? We try to make it as schematic as we can. You have to walk the talk when you do a functional organization. That means that if you say that Sales and Marketing is responsible for sales and the brand development, you have to make sure that they have the mandate, but they also have the tools, means, and resources to deliver on those KPIs and targets. You can see some examples here that it is going to be allocated and fully responsible for the different areas.
You have the sales, gross profits, selling, and admin. All of that are fully in line with and also allocated to the Sales and Marketing organization because they have all the resources there. They can actually decide themselves, and they can put targets without actually looking into any other areas. Customer satisfaction, dealer performance, market share is also their responsibility. On the Operations side, you have the standard cost of goods sold. You have the variances. It will be a very variance-driven operation because there is no profit and loss in Operations. It's mainly how well do we execute on our delivery plans and how well do we fill our factories going forward. Of course, investments and the work in progress in inventory as we have as well. Technology then will be very much on the financial side and expense function.
It will be heavily measured on the quality of the projects and the deliveries that we're going to have on the non-financial order operation and KPIs. Of course, we add all this together, and then the management team, the truck EMT by itself, and at the end of the day, myself will then be responsible for getting the whole result together. If the bits and pieces are in order, it's just a matter of putting it together, and then the profit and loss account also will be in order. That is the rationale behind. On the business area side, it's slightly different because there we keep for Volvo CE, Penta, and all the others, we keep the business area reporting. They will have their own profit and loss and balance sheet as we have it today.
That will be following on the normal, both financial and operational KPIs, including then Volvo Financial Services as we have done it before. By this, you can then say that we have a complete picture on where we are in terms of responsibility, who has the means and the tools in order to execute, and what targets do we have. It's a fully aligned sort of strategy and structure according to that as well. If I then try to summarize the organization, again, it's coming back to increased customer focus. I will come back to that over and over again. To me, this reorganization is very much focusing on executing and improving top line. It's about brand assets, the coordination, and it's about making sure that we have a speedy implementation process and moving forward.
You can see then the clear responsibilities, speed in execution, improved efficiency, and also, which is very important, accountability that also goes together with the mandate. All in all, we are implementing this now. We are in the process. We are according to schedule. This operation, this organization will be operational by January 1 next year. It's a lot of work ongoing now in terms of details, in terms of business models, in terms of accounting, in terms of announcement, in terms of a new management team, and all of that. In the meantime, we also need to make sure that we execute on the normal business. So far, the organization has done a tremendous job in doing both. Focus on the business and manage the change. That is sort of the slogan that we have right now. So far, people have been extraordinary in doing that.
Moving on to the next actions to be done, that is the customer offering. One thing, if you look at it now in terms of actually going forward to the next step, you will have a sort of a three-step activity. The first step now that we're going to start with next year is to really make sure that we globalize and globally maximize the brand positions. That means that we need to optimize the brand portfolio from a group perspective. This work now with all the brands that we have, we need to take them, look at it by region, by brand, but also by market and by brand to see, do we have the maximum position for the Volvo Group? Is the position that we have 1 + 1 = 3 , or is it 1 + 1 = 0.75?
This is a work that we have to do now. Of course, we also have to go through and make sure that we have the brand characteristic, the brand promise that goes in line with what we want to do in terms of actually positioning those brands into the market going forward. Finally, it's then taking the step of defining the brand position in the market for the targeted customer segments. As you can see, it goes all the way back to the vision that we say that we want to be active in selected segments. This work is something that, of course, has already started and has been ongoing. With a new organization, we would do it on a total level rather than brand by brand level. Next step is then to fully align our product strategy. We have the brands, we have the result of the brand positioning.
Next step is, of course, to see what kind of product strategies do we need to have in order to fulfill that brand promise. This is also work that we need to do when it comes to define this distinction between unique and common and similar. We need to align the features. We need to make sure that we have the cost levels. We need to make sure that we have the strategy in terms of the functionality of the different vehicles that we want to have going into the different brands on different markets and different regions. Of course, create aftermarket and service offers, telematics, and things. The final step is then to take that. We have the brand positioning, we have the product strategies, and that product strategy will then be transformed into revised product plans.
In the product plan, you put it over time, you put the money to it, you allocate resources, and you develop the products accordingly to make sure that you meet this going forward. Here we have a number of different tools that we will be working with when it comes to the common architecture and shared technology. CAST, for instance, is something that we have developed over the years very well, and we are going to continue to do that going forward. You have the platform that we have successfully implemented on the engine side. It is going to be the basis for doing this going forward as well.
Having the answers from step number one going into step number two to step number three, we will, of course, have to revise some of the thinking and some of the issues that we have had before to make sure that we are following it in a good way. Basically, if you sum that up, you can say that the alignment of the commercial strategy to drive the market share and profit will be done in this process I just described. It is about, again, to fully utilize each brand in each market. Let me take an example. In CE, and you will see that a little bit later, we have been very successful running a dual brand strategy in Brazil. The question that I asked to the organization, what about the truck side? How are we going to deal with that?
There is no answer, and I do not give you any sort of, but just putting that on the table and saying, how does that look? How does it look in that market? What about this? Again, just by opening up this discussion, you get a lot of interesting discussion, which then can be transferred into the different areas. Efficiency in sales and marketing, another thing. By having this organization now fully focused on, and this is an enormous resource that we're going to have these three regions, you can imagine they do not fight over each or with each other. They are colleagues in actually trying to do the same thing, that is to sell and gain market shares, be profitable, and so on and so forth. Having that discussion in how can we share common back office systems?
Where do we stand in implementation of, for instance, dealer support systems, products in aftermarket services, and so on and so forth? You can envisage a huge potential in actually putting this in front of the new organization and get a lot of tractions going forward into this. If we then look at taking care of the opportunities, Asia is a good example, I think. Here we can see a little bit what we're doing right now. If you look at the UD brand, we have a Japanese market is, of course, a tick, but we have a lot of activities ongoing on the UD brand with Southeast Asia and export out of Asia.
Also, of course, the development that we do now in the DND joint venture, where we today are looking into together with our partner in a new sort of product line in terms of better supporting the Chinese market, for instance. With the Eicher brand, we are very sort of competitive. We are the third largest commercial vehicle producer in India. Here again, the complete product renewal with special focus on heavy duty is ongoing. We have taken the decision to expand the capacity from 48,000- 66,000 by 2012. We have the startup medium-duty engine production in India 2012. There is, of course, a lot of issues and things that have been started and are ongoing already. These kinds of actions and activities, we need to look into other kinds of markets as well to see how we deal with it.
Finally, if we look at utilizing the full potential, we have to look at this in different ways. What I want to look at is the full sort of the profit and loss. Looking at it again from a revenue growth point of view with the new organization, with the sort of improvements that I talked about before, we have the optimized brand positioning, which I've talked a lot about. Right product for the right market at the right segments. Then, of course, the Asian opportunity. All this done correctly is, of course, a major possibility for the revenue growth. Of course, this organization would give, even though it's not the prime reason, cost efficiency. I mean, we are aligning the product specification on brand positioning. We do, of course, when we find them, address overlaps. If we have done double work, we shouldn't be doing that in the future.
If we find ways of doing better, we should do that. We have the production efficiency I talked about, the purchasing leverage. By putting all the three purchasing organizations together, we're creating a massive purchasing power. I'm talking about 3P. I'm talking about powertrain purchasing and the non-automotive purchasing, which is now one organization, functional organization. We see that R&D efficiency we talked about, that is, of course, the R&D 30 program we're talking about. We see a lot of leverage coming forward there. Basically, it's okay. I have to ask that because this one is a number you have been looking for. I know that. When I look at all this in terms of the potentials that we have, and now I'm coming back to saying why we're looking at the potential and how we're going to meet it.
Over time, I think there is a potential operating margin improvement of at least 3% again over time if you look at it from a margin point of view. Again, it's a combination of the revenue top growth, which we have talked about a lot, and I have talked a lot about, and then cost efficiency. It's the combination of the two going forward. Of course, this is a big change. We should have all the respect for that. It's a big change from an organization point of view. It's a big change also for all our employees that have to start to think in a new way compared to what they were used to for many, many years. With a business area by business area, we're talking about cultures, we're talking about belonging, we're talking about pride.
You have all these kinds of things that you have to take care of. It's also a lot of uncertainty during the transformation phase. It's a lot of new things that you have to put in place. It's also sort of an overall new way of looking at things and discussing climate, defining processes, defining new roles and responsibilities. All of that creates an uncertainty. Having said that, it's good to see then and that we have an example that we did and have done this before. In order to sort of bring back a little bit the big brushes, you have seen some of this already before when it comes to Volvo CE. It's about shifting the focus from acquisition to organic growth.
I think what we have seen now over the last two and a half, three years in Volvo CE is that by doing these kinds of things, broad and competitive product portfolio, that's what I talked about before. It is an alignment, and I will come back to that a little bit later, an alignment of the product portfolio. By committed and aligned distribution, we have worked a lot on the distribution. The dual brand, which was absolutely new in the Volvo CE, we implemented then in broad scale two years ago. Of course, technology in fuel efficiency and legislation is a given. We need to make that. I'm glad to say that we have done a very good job on that and very well accepted on the market.
We have managed to go now in three years from number four, five, or whatever, up to number one in the Chinese market. We then have a new organization in place. All these ingredients are, of course, there in order to create a basis for good organic growth. As you can see, we have been able to, as I showed before, on the CE and Penta port to grow in par with competition on an organic basis over the last years. The push for organic growth, I think, is definitely something, a message that I want to send out as well. In CE, we're doing this now, for instance, with the SDLG and the Volvo brand coming together. Here you can see sort of a schematic picture on how we divide the market with the Volvo on top and SDLG on the more mass market.
Of course, you will have a point where they meet. The trick is to make that point as small as possible. What is very interesting is then the schematics around the vehicles. There you can now start to see what is dual brand. You can start to see what is common. If you remember, I showed that on a slide before, what is common, what is similar, and what is unique. You can start to think platform again. Without actually touching the brand and the brand promise, you can start to get a very good variance on the thinking and the discussion, how to create scale economics at the same time, broaden your offer, at the same time making sure that you actually capture a bigger part of the market than you have had before. In the CE case, we will definitely continue to develop the dual brand strategy.
I think we are in the beginning of a journey, and we will continue to do that. You have to, and that's the step number two, you can actually start to attach some soft offers to this as well. You can have telematics, and you can have that, again, creating a scale of economics. Of course, which is very important, I will show you an example in a minute, the dealer development, where you actually can create in certain markets a better cost base for the dealer, a more attractive offer for the dealer, and making sure that he has better possibilities to capitalize in order to drive the growth. What we did in terms of the organic growth part of view, you can see here, we did a very good work together with our partners in SDLG.
Basically, schematic or very easy, you can say that we brought to the table Western technology and a lot of experience from many, many years in different areas of the world, where SDLG and Lingong brought in the thinking about low-cost solutions, both in terms of engineering, but also in terms of production, in terms of technical implementations. What we did, that was actually to align the product plan completely between Volvo and SDLG over the next years. That then resulted in this product plan I've talked to many of you about, which is now containing 55 major upgrades on new products coming out from an organic growth point of view, capturing both existing segments and growing in an existing segment, but also capturing new segments that we haven't been active in before. This is a very good example on the dealer side.
You definitely see that you have then in Brazil, where we now have the SDLG launched and basically moved from zero Chinese content because we didn't have a Chinese content and is today number one in Brazil on the Chinese import side in Brazil with a profitable business from day one. We have chosen the concept of having the same dealer ownership structure, and then we have different front ends vis-à-vis the customer. What you see is an example of a dealership owned by the same people or company, but you have then completely two different sides of the customer interface with one SDLG and one Volvo. You get the benefit of increased volumes. Now it's a matter of looking at how can we develop this even further. This is an example of the push for organic growth from a branding point of view.
You can also look at it from a production point of view and localization point of view. We have had then for many, many years the Shanghai and the Shanghai Korea manufacturing in the CE. What we lately have done is that saying that by pushing organic growth, you need to be closer to the market. We're talking about final assembly, final assembly and building up the local supplier network in a good way. Just in a couple of years now, we have decided to actually move, as you can see here now, to have local manufacturing in many places. It's relatively cheap in terms of capital investment because it's final assembly, but gives a huge leverage of actually growing the business in Russia, in Brazil, and in the future also in the U.S., Shippensburg. It gives you also the advantage, which we have talked about many times.
You get rid of the currency flow issue that we have in CE by shipping vehicles around the world, producing only one currency, selling none in other, and exposing ourselves in different ways here. It's not only the branding and the branding position. You go also to make sure that you fill up with and having a very efficient production coming with it. The same as I talked about for the truck side and the reorganization we're doing, we have the same kind of thinking here where we again primarily looking at what growth potential can we have. Never, ever leave track of the growth potential. That is what's going to sort of give us the future business going forward, install base, revenue services, spare parts revenue, and so on and so forth. Of course, we need to keep an eye on the cost efficiency in the organization.
Whenever we find efficiency, we need to, of course, address them. It is a story about top line growth combined with cost efficiency that will then bring us to the end. By that, I then conclude with this picture. What I tried to tell you today is a little bit the reasoning why we did it, how we built up the case, how we created the platform on which we then built a new organization and capturing the full potentials. The answers to it, new organization, clear responsibility, easier to work in, and of course, a lot of changes, but in a more efficient and agile organization as we think it. A lot of focus on the brands, a lot of focus on the enormous brand asset that we have acquired over the years.
Make sure that we take full advantage of that, making sure that we then come back to the financial targets and live up to them as being the number one or number two in the market in terms of profitability amongst our peers. Of course, also looking into a little bit that we have managed in the VC to actually by working with a dual brand, being very successful of having a good story on organic growth. Capture the full potential of a strong business portfolio. This is the end picture, and I thank you very much for listening. This gives us exactly, Christer, 22 minutes of answering questions time. Thank you very much for listening. How going to be the...
Exactly. We need to speak into a microphone because we are also broadcasting this live. Can we have...
You're going to stick onto that microphone?
Yes, I can do this one.
Okay.
Good afternoon, Nicholiel, JPMorgan. Two questions, please. First of all, a 300 basis point margin improvement over the cycle. What do we need to think about in terms of a normal through the cycle margin? Do we take it to 12%? You're currently sitting at about 9%, or do I need to think about 11% as you were sitting at 2006, 2007 levels at around 8%? How do we think about the new through the cycle margins when you're sort of around mid-cycle still? Second question is flexibility in the downturn. You highlighted that mainly in the downturn, you're undershooting your peers. Next to increasing the number of temporary employees, what are the other measures you're taking?
If I start with the first question, I think what we say now is 3% on the operating margin over time. Okay, so this is what we know over time, and that's what we're looking at. Some of the improvements will come faster than others. If you look at what I said, the revenue growth we're looking at defines, of course, how we are positioning our brands, what kind of adjustments we need to do to our product plan. That is more of a long-term part of it. Part of it, when we find double work and we find issues that we are doing, of course, we can do that quicker. I will not give you any... First of all, I say over time, not over a cycle. I say over time. That is one. Secondly, of course, we will keep the eye on our financial targets.
I will not give you a deadline when we are done with it, but it will be over time. On the flexibility side, I think there are two ways of doing the flexibility. One is, of course, to make sure that we have a flexibility on the workforce side to make sure that we can meet ups and downs. We're doing that, and I think we will have that situation going forward as well. It is also, to me, flexibility to make sure that you have the cost structure in place to be able to have more buffer when things are going up and down, to make sure that we don't fall off the way we have done compared to our competitors before. It is two sides of it.
Thank you.
Hi, [Frederic Stone] from UBS. On the 3% margins there, could you give us an idea of what proportion of that is costs, and what you think is the benefits of greater revenue growth when you implement your sales and marketing strategy?
I would rather not go into that split right now because, as you've seen, we have a lot of work ahead of us on two sides. One is, of course, to do the work on the brand positioning, making sure that that is rolled out and making sure we get the benefits out of it. The second one, we also need on the cost efficiency side now, what we have done is to announce the high level. I want to make sure that the guys that come into charge and are in charge now take full responsibility on the cost efficiency. That means that I will not second guess. They will get targets. We will have to look at it. At the end of the day, they need to commit to deliver it. That we cannot do until we have seen the whole picture of the organization.
Therefore, I will not go into that. If I take a broad overview of everything, I see those at least then the 300 basis point, as you call it, 3% as I say. Yep, it's up there.
Okay, I'm next. [Iwan Tchokmeer], Nordea. If I could ask you two questions, please. First question regarding the new target to grow organically, at least as much as your competitors. You talked about the sort of focus of the organizational change being to capture more growth. Now, the fact that you have a target to grow at least in line with your competitors, does that mean that you're just sort of being conservative at an initial stage? Leave more upside for later? Does it mean that you expect competitors to do exactly the same? Logically, you should be able to see even more top-line expansion if that's the key driver for improvements.
Second question, if I give you that straight away: Volvo has about SEK 27 billion worth of book value of real estate. Is that an area, looking at the organizational changes you presented, you would consider not necessarily having to own everything?
Okay, I start with the first question. I think it says equal or higher. Okay, it says in the target, and to me, it's standard equal. The low end and higher has no roof to it. I think it's very important to make sure to me, the top-line growth is extremely important to make sure that we get all the benefits and synergies that we need to have, both from a production system point of view, but also from leverage on the investments we have done previously in the brand. Making sure we get full investments of that. If we are successful with this, of course, you can call it conservative, whatever, but at least we should be on par with the growth. This will again come into this expression that we're using then over time.
As I said, we had a, on the CE side, you had a very quick response because we have the SDLG, we had a very good portfolio platform. We did an extremely quick work on expanding that dual brand strategy with excavators and internationally. That was a specific case. You could do that quickly. Otherwise, it takes much longer time, and it will work itself over time. On the real estate, I don't know, Mikael, if you would like to, but I can give you a very, very short answer. There are no plans to do any changes of that. We have a footprint of real estate that we have today. I don't know if you want to give a little bit more flavor to that.
Yeah, I mean, of course, we have a real estate policy. It says that if it's a strategic real estate that we are going to be in for a considerable point of time, that is something we own. We are renting if it's more of a temporary nature for a couple of years, or if it's more pure office, sales reps' office. That's something we're going through over time. The number you mentioned there, the absolute majority there is, of course, our factories and the sites here in Sweden, for example, the foundries and so on. It's not real estate normally that is worth more than what it means that we are sitting in them. It's not like an ordinary real estate company, of course. It's something evaluating all the time here.
Thank you.
[Engellau], Handelsbanken. I just have one question. You didn't mention that much detail about ARO in your financial targets, and I also hinted you would touch upon this at the capital market day. I was wondering if you could share some light on how we should look at ARO benchmarking and profitability and growth going forward. Thanks.
I think, as I said, on the quarter three result, just because it's a new CEO, there's been a lot of change. In that respect, there hasn't been any change. We have now, and I think it's important, we have sold off the service businesses. We closed down the Broma. We sold off the U.S. port. I think Volvo Air is participating very well in different programs and focusing now on their core activities. What they need to focus on now is to make sure we get productivity up and running, to make sure that all the investments that were done in programs are paying off, and also doing whatever they can to mitigate the extreme headwind that they have on the dollar rate. This work is ongoing as we speak now. They are together with Penta buses and then placed in the business area with [Håkan Karlsson] as Head.
They're going to continue to focus on that and making sure we're driving those issues going forward.
Okay. We have one more question there.
Hi, good morning. [Larry Demer] of William Blair. You discussed SDLG in emerging markets, how you avoid cannibalizing your legacy Volvo sales, and the profitability vis-à-vis the two business units. Also, you've made bold acquisitions in the past. Outside of construction, would you consider in CVs or mining or anything else, for example?
On how we avoid cannibalization? Was that your question? That is exactly what brand positioning is all about. We did extensive work on that in order to make sure that we get the features, the costs, and the distribution correct in order to make sure that we didn't cannibalize. As you see on the picture, you would always have a little bit of cannibalization. As long as that is rather limited, I don't mind. I think that can sort of give a little bit of a trick, but the big shank must be outside. I must say, the interesting thing is in Brazil, for instance, we did this and we were spot on. We had above 90% of the customers buying an SDLG have never bought a Volvo. I don't know if they've ever been to a Volvo dealer.
We don't track that, but at least they have never bought a Volvo before. There, I think we did the right spot. This kind of exercises, we need to continue doing as we go. When it comes to acquisition, I think the whole sort of message about the presentation that I did was very much of the organic growth one and showing the potential that you actually can by doing the things that we have done and the things that we're going to do actually push a lot of organic growth with the size that we have. If you are number three, as we are in CE, you can do a lot of things. Having said that, of course, I'm paid for and [Pat Olney] is paid for and everyone in Volvo Group is paid for to always keep an eye on what's going on in the industry.
We have done that before. We're doing today and we will do that tomorrow as well. The main point and the main focus is exactly this, pushing everything we can to make sure that we get as much out of the organic growth, utilizing the full potential of a strong business portfolio.
Thank you. Is the profitability of SDLG comparable with your legacy Volvo?
We don't specify that, but we usually say that if you look at the profitability of CE and you look at the size of the Chinese market and then you look at the profitability of CE, you have to conclude that there's no way that we're going to have an anchor. We cannot show those numbers by having an anchor dragging. Of course, SDLG is profitable. We don't specify those numbers exactly how much it is.
I had a question on financial services. We have a situation now in Europe where in parts of Europe, banks are going to be deleveraging and pulling back from, I guess, truck financing as well. What's your view on how financial services should take, what's your view on financial services actions with regards to that market share opportunity when the banks pull back?
As a captive finance company, I think VFS has done a great job in actually mitigating what is the most important thing, and that is making sure that the market shares you're taking or not taking is dependent on the risk structure that you have. You make sure that you have, and I must say that the more I understand about VFS and the more I work with them, we have in VFS an extremely good risk mentality, but at the same time, also a good view on going that. It all depends on, and you cannot give a casual number on that.
I think what is important for a captive finance company is to be there when our customer needs it, to making sure it supports the business, but supporting the right business in order to make sure we don't increase our risk level on the balance sheet, which can easily be done. We have all the processes in place. It's also a matter of developing new ways of actually developing products for the VFS market and looking at different aspects of getting financing, not only everything from our own balance sheet, but also utilizing dual brand sourcing also there in terms of the VFS, making sure that we get the financing ready for our customer, but not necessarily always looking at the traditional way of doing it, which then means that in different countries, you need to develop the business in different ways.
There are different aspects to the VFS, but again, the balancing will be to grow, but making sure that you do that with all the risks under control. That triggers some questions, obviously. Oh, sorry, sorry, sorry. My fault. Please.
I'm a small guy. Yeah. [Kenneth Hall at Carnegie]. A question on this new organization. Often, it's important when you make a big change that you have some success in the beginning, so everyone feels comfortable and they follow suit. Do you see the biggest risk to this big change that next year is going to be perhaps worse than your market outlook for Europe, for example, and that you need to go into more of a cost-cutting mode and that the changeovers sort of lose pace, or what's the greatest threats you see to this new thinking?
I think, to be quite honest, the ups and downs in the market, I don't see as the major threat because I have been doing a lot of reorganizations in the past. Sometimes we're in good times, sometimes we're in bad times. When we did the CE, it was the worst of all times. The issue is not that. The issue is that you manage to get the communication out that people, everyone understands why we're doing it. You have to do that very rapidly. You have to make sure that there's no discussion out there that says, why are we doing it? We don't understand why. It is a different thing if you agree or not, but at least everyone needs to understand why.
I must say, we have got a great acceptance in understanding the why and get an understanding on that, yes, this is the next logical step in order to do what I just described here. That phase we're going through right now, and I'm doing a lot of communication and traveling around because so far this is very much sort of coming back to me with all the presentations I'm doing. We're using all kinds of modern tools in social media. I did a chat yesterday, for instance. We haven't got into Twitter yet. All this getting out, getting answering the questions, that's much more than ups and downs in the business, actually. So far, so good.
Thank you.
I think there was a couple before, Nick.
[Yann Benamou from Exxent]. Question, please. The first, please do a follow-up to the previous question. I guess that a simplified structure also means increased responsibility for the key people. Do you see this as a risk? Secondly, as you said previously, you had a certain number of acquisitions in the past. Now that you focus on organic growth, what are the implications in terms of CapEx? If this does not change the big picture, what could this mean in terms of a dividend policy?
I think the first one in terms of responsibility for the persons because of the size of their responsibility. I don't think that's an issue. It's all a matter of, to me, it's very important that someone who's in charge of something needs to be fully responsible and also be able to actually correct things and make sure that it can drive the whole. I used to say having the six strings on the guitar when you play guitars. That's very important. This organization gives every manager that. I don't think that's a risk. It's more, I would say, an opportunity.
What we have to do in the track EMT, the management team of track, is, of course, to be extremely coherent and talk in the same language and make sure that we get all the issues on the table and take decisions, clearly communicate, and then make sure we implement. That I'm really looking forward to. The team that I have put in place is a team definitely second to none when it comes to experience, when it comes to knowledge, and also team spirit. Someone said we're a little bit like racing horses. You know, we're starting to wait for the 1st of January so we all can get going now. We have to focus on the business for the fourth quarter. In terms of the CapEx, I don't really, you mean by focus on the growth that you would have an increase in CapEx?
No, I don't think necessarily per definition. I mean, if you look at what we're looking at, the investments that we have done are enormous in the brands. We have done a lot of investments in our factory footprint, especially running up to the 2009 crisis. What we have done is, and we have continued to do a lot of investments in R&D and technology. We have the bits and pieces, and I don't think necessarily this has anything to do with higher or lower CapEx. That's more of a decision we need to take on a business basis, but it has nothing to do with the reorganization per se. We do have, and we have had, a lot of investments in the past as well. Okay, we have one here.
[Engellau], Handelsbanken again. Moving from a matrix organization to a functional organization, looking at the cost side and the synergies on the revenue side, with these 3% of increasing profitability, I read efficiency, execution, speed sourcing in the cost side. Is there an element of reducing employees here, or is it just these more efficiency things we should look at?
I think the prime reason is, and the prime result will not be that. If, as I said, we find overlap works, if we find the processes that have done exactly the same thing, we can merge into one, we have to look at it. That is something that we will now start to review. In order to do that in a proper way and in an analytic and planned way, you need to get the whole sort of organization in place, and then we will go through that. To me, if we have that kind of dual work, that is cost efficiency, that is not where it should be, and we need to address it. That we will do over time.
Second question there. Should we be expecting any cost program for this? Like what should we be expecting charging for implementing this new organization? Will this be on a quarterly basis?
Again, that's too early to say. That is part of that, what will then come going forward because that is depending also on where the business is going. We have our business plan right now, and we see that unfolding the way we discussed two weeks ago. We need to get everything in place. A little bit, again, coming back to I will do this. My methodology is a little bit the same as I build a platform of actually coming up with the organization. That's systematic and making sure that we have the sound foundation. Going into the implementation, I will continue doing the same thing and not rush things through unless I really see that we can move very quick on it.
Yes, please.
[Nico Dilchebi Morgan], two follow-up questions, please. First of all, about a year ago, you announced that you'd like to convert 85,000 engines to your own platform in India. Both looking at Nissan Diesel, so the UD trucks, as well as some of the construction engines, wondering where that stands and when you intend to complete that new platform. Number two, if I look at the number of employees versus your sales base, I see about 25% of your employees, about 23% of your assets being based here in Sweden, versus only 5% of your sales being based here in Sweden. How do you intend to look at that going forward? Let's say in five years' time, how do we expect to see the distribution of those assets and sales, sorry, sales assets and employees?
I think on your first question, it was what I pointed out on the slide with India engine factory, and I think it says 2012 there, right? 13, sorry, 2013. That's what we talked about there. When it comes to the distribution of employees and the proportion of, you have to look at it two ways. If you go back 10 or 5 years, you will see a completely different picture where it would be even more heavier sort of versus the Western European compared to Asia. If you look at where the growth has been, it's, of course, in South America and Asia. Will the growth continue there? That looks like we have growth markets in those markets, and therefore, of course, we need to look at that. Would that mean that that necessarily then has a negative impact on the Swedish or the Western European side?
It's impossible to say because that's too many variables to call that question right off. I also think it's important to notice that in Sweden and in Western Europe, we have a huge asset in our research and development, both on the engine platform side and on technology on the vehicle side, which is something we have built up over decades. It's, of course, a very important part of the cluster where we're now looking forward in terms of technology.
Very good. I think it's 21 past. I missed within a minute there. Yes, I apologize for that.
Can I do a clarification? I think on the slides you will receive, it will say 2012 that we will start engine production in India for the medium duty. Actually, it's true. We'll have some long block production at the end of the year, but it's really 2013. You will see any volumes coming into the products.
If we didn't have any more questions, I think we say thank you for today.
Thank you very much. Very nice of you to come. See you next time.