Volvo Trucks remains strong in Europe

During the second quarter of 2007 the market trend for Volvo Trucks remains very strong in Europe and significantly weaker in North America.

Order bookings rose by 68% in Europe, where the high level of demand means that it is a challenge to be able to deliver in pace with customer orders and the focus is on gradually increasing capacity in the entire industrial system to be able to meet demand. However, the half-year trend in Eastern Europe (+81%) and Asia (+15%) is particularly favourable as these are important markets in which we are continuously strengthening our position and expanding our distribution network to provide our customers with even better service. Demand also remained favourable in South America (+27%).

As predicted, in North America the quarter was difficult (-79%) as a result of the transition to new trucks with a new generation of engines. There were also disturbances in conjunction with changes in the North American production structure intended to create a more efficient structure for the future. Toward the end of the quarter, the situation in the plants gradually improved, but productivity is still unsatisfactory. Despite the difficulties, North American truck operations achieved a margin of 8.3%.

Investments for the future

Volvo has taken decisions on investments to take advantage of the increased demand for its products in such growth markets as Eastern Europe and Asia. With rising demand, there is an increased need for both heavy diesel engines and gearboxes. To meet this demand, Volvo will invest a total of SEK 1.7 billion (£ 122m) over the next three years in engine and gearbox production.