Production hiccups at Volvo Trucks as demand rises 63%

Leif Johansson, Volvo Trucks president and CEO, says that net sales increased to SEK 48 billion and operating income to SEK 3.5 billion. He also says that, although the improvement was broadly in line with expectations, there were "some temporary production disturbances impacting productivity when the entire industrial system, including our subcontractors, raised its manufacturing pace to a higher level". Johansson now says that the truck giant expects productivity to gradually improve when the firm's own plants and those of its suppliers "have stabilised production at the higher level". That needs to happen: Volvo believes the European market for heavy-duty trucks rose 8%, to 179,000 vehicles, in 2010. "In 2011, we anticipate the European market for heavy-duty trucks to increase to approximately 220,000 vehicles," states Johansson. Meanwhile, he expects the North American market for heavy-duty trucks also to increase to some 220,000 vehicles, following growth fo 20% last year to 142,000 vehicles. "It is primarily the market for highway trucks that is developing well, while demand for construction trucks is considerably weaker," he asserts. As for the rest of the world, Johansson states that the South American market, fuelled by Brazil, perform well in 2010, up 71% year-on-year, while Volvo Trucks' Asian operations – its Indian joint-venture with Eicher – set new delivery records late in the year. "We have decided on key investments to increase our manufacturing capacity in India, which will further strengthen our position there, as well as the export of products to other markets," he says. And he adds: "On the back of an improved order book, our focus is on trimming the industrial system to enhance productivity and capital efficiency. We are also intensifying our product-development activities ahead of several key product launches in the coming years."