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Volvo Group Headquarters Volvo Group Investor Update, London 1 June 27, 2016 Volvo Group Investor Update London, June 27, 2016

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Page 1: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group HeadquartersVolvo Group Investor Update, London1 June 27, 2016

Volvo Group Investor UpdateLondon, June 27, 2016

Page 2: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group HeadquartersVolvo Group Investor Update, London2 June 27, 2016

Reflections after the first eight months

Page 3: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

3

The Volvo Group journey continues

1999-2011ACQUISITION-DRIVEN

GROWTH

Scale, synergies & geographical expansion

2016 IMPROVED

PERFORMANCE

Customer focus, simplicity, speed,

continuous improvements, organic growth

2012-2015TRANSFORMATION TO

CLOSE THE GAP

Product renewal, brand positioning & cost efficiency

Volvo Group Investor Update, LondonJune 27, 2016

Page 4: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

The Volvo Group is well invested with unique and strong assets to build on

4

Leading brands and products for each segment

Competitive technology platforms

Modern industrial footprint Global distribution and presence

Customer satisfaction and loyalty

June 27, 2016Volvo Group Investor Update, London

Page 5: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

The Volvo Group is well investedCapex (PPE) significantly above depreciation for 15 years

Volvo Group Investor Update, London5 June 27, 2016

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

0

5

10

15

20

25

30

35

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total investments Ratio capex/depr (PPE) Average ratio

SEK bn

Cash R&D+PPE+Leasing vehicles

Page 6: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

6

Improved performance

Volvo Group Investor Update, LondonJune 27, 2016

2015

2014

Good performance Medium performance Lower performance

Page 7: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Page 8: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

STRATEGIC PRIORITIES moving forward

1

3456

2

7

Volvo Group Investor Update, London8 June 27, 2016

Page 9: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London9

Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 10: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London10

Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 11: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Our customers - our business

Volvo Group Investor Update, London11 June 27, 2016

DISTRIBUTION France MINING Indonesia

LONG-HAULAGE EuropeCONSTRUCTION US

Driver

Fuel

Repair & maintenance

Vehicle

Admin

Page 12: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

12Volvo Group Investor Update, London

Truck brands

Volvo Trucks

EU30 15.7%NA

12.2% Taiwan 17.9%

Brazil 20.1% Australia

14.9%South Africa 13.3%

June 27, 2016

West & South 14.6%

North & Central 3.5%

Renault Trucks

Mack Trucks

CA 7.3%

US 8.0%

UD Trucks

HD 18.3%MD 5.8%

Page 13: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London13

Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain– and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 14: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group HeadquartersVolvo Group Investor Update, London14 June 27, 2016

Value offering to succeed in emerging markets

Long-haulage customer in Europe

Driver

Fuel

Repair & maintenance

Vehicle

Operating cost structure for a value truck customer

Driver

FuelRepair & maintenance

Vehicle

Page 15: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Dongfeng Commercial Vehicles

(45% ownership)

VE Commercial Vehicles(46% ownership)

UD Quester

15

Creating a separate eco-system in the value segment

Volvo Group Investor Update, London

Cabs

Technology & components

June 27, 2016

2015:HD 13.8%MD 18.9%

2015:HD 3.7%MD 33.5%

YTD May 2016:Thailand HD 4.0% (2.2)Indonesia HD 15.2% (5.8)

Engines Transmissions

Purchasing & supply chain

Networks

Page 16: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London16

Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 17: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

17

COMMON COMPONENTS AND VERSATILE MODULES

MODULARITYBASED ON COMMON ARCHITECTURE

BRAND UNIQUE/CUSTOMER-TAILOREDSOLUTIONS

EFFICIENCY IN THE VALUE CHAIN

Industrial structure

Common processes

Production flow

Common Architecture Shared Technology (CAST) to drive efficiency

June 27, 2016Volvo Group Investor Update, London

Engines

Electricalsystem

Transmissions

Chassis

Connectivity

Page 18: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

CAST where it matters

18Volvo Group Investor Update, London

June 27, 2016

Differences in customer needs

High Low Scale / Critical massLow

High

Technology C

Technology A

Component A

Component C

Component E

Technology B

Component BComponent D

Page 19: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

R&D – improve efficiency

Volvo Group Investor Update, London19 June 27, 2016

+ Improved product quality+ More stable workload+ Less project complexity+ Improved R&D productivity+ Less risk+ Competence retained and developed+ Empower people

Continous introductions Debundle large projects

into several Continuous improvements

Page 20: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

20

ALTERNATIVE DRIVELINES & FUELS

Taking the lead in new technologies

Volvo Group Investor Update, LondonJune 27, 2016

AUTOMATION CONNECTED PRODUCTS

>500.000

Page 21: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London21

Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 22: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Governance for continuous improvements

Volvo Group Investor Update, London22 June 27, 2016

Operational level

Portfolio level

Strategic level

Page 23: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Creating a culture for continuous improvements

Volvo Group Investor Update, London23 June 27, 2016

Volvo Production System

Agility and flexibility in production volumes

Variant reduction

Continous introductions

Quality

Brand/ regionalized value chains

Page 24: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London24

Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 25: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group HeadquartersVolvo Group Investor Update, London25 June 27, 2016

Customer loyalty starts in retail

Page 26: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Great potential in increasing service sales

Untapped potential Potential

service sales

Captured service sales

Volvo Group Investor Update, London26 June 27, 2016

Page 27: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Untapped service potential - illustrative

Volvo Group Investor Update, London27 June 27, 2016

Untapped potential on existing fleet

Market share

Products/services

Untapped market share potential

Uptime services

Insurance

Financing

Workshop

Vehicles / Machines

Parts

Page 28: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London28

Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 29: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Leverage Group assets

Volvo Group Investor Update, London29 June 27, 2016

All business areas to deliver on P&L responsibility ...

... with ability to pull on Group-common assets: Customers & dealers Powertrain technology Financial services Electromobility Knowledge & talent Etc.

Page 30: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Strategic priorities

Volvo Group Investor Update, London30

Strategic priorities Reinforce Volvo as a global premium HD truck brand and regain position and market shares of Renault, Mack and UD as regional high-end truck brands

Create the most desirable HD product and service portfolio tailored to selected premium, high-end and value segments

Secure robust profitability through leading R&D, quality, purchasing and manufacturing operations using Volvo Production System

Establish brand specific sales operations with focus on retail excellence and a growing service business

Leverage Group assets in our non-truck Business Areas, creating additional profits, synergies and technology leadership

Capture Asia growth through JVs and Value Truck in a separate value chain –and leverage in other emerging markets

Revitalize the Volvo Group culture with focus on Customer Success, Trust, Passion, Change and Performance

1

3456

2

7

June 27, 2016

Page 31: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

Continuously review commercial performance and take action

Volvo Group Investor Update, London31 June 27, 2016

Product lines, services, market areas, segments, product projects, variants etc.

Exit

Develop

High frequencyfollow-ups

Volume

EBIT

Page 32: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group Headquarters

What we want to achieve Clear leadership and profit

and loss responsibility for each brand

Those closest to the customer are empowered to make the right decisions

More regionalized value-chain approach

Simplicity, improved speed

A mindset for continuous improvements

32Volvo Group Investor Update, London

June 27, 2016

Page 33: Volvo Group Investor Update€¦ · ACQUISITION-DRIVEN GROWTH Scale, synergies & geographical expansion 2016 IMPROVED PERFORMANCE Customer focus, simplicity, speed, continuous improvements,

Volvo Group HeadquartersVolvo Group Investor Update, London33 June 27, 2016

Q&A