Increased order intake for Volvo Buses

Volvo Buses reports increased order intake during the third quarter 2008. Deliveries were higher than in the corresponding period a year earlier, but earnings remained negative.

The market for coaches in Europe is declining as the sharp downturn in the economy has caused increased uncertainty among operators and dealers. The city bus market is more buoyant as the interest for environmentally adapted vehicles and hybrids continues to increase.

In North America, the coach market is still on a low level while there is still good demand for city buses. In Mexico the coach market has recuperated from the beginning of the year and compared to last year shows an increase through August, where prebuying ahead of new emission standards in 2009 is one factor behind the increase. The activity level within Bus Rapid Transit systems in Mexico is high.

The total South American bus market continues to be strong, however with signs of weakening in Brazil.  During the first half of 2008 sales of buses increased in Asia, where China records the biggest increase, mainly driven by city buses. In South Africa and the Middle East the activity level has increased compared to last year.

During the third quarter, order intake amounted to 2,324 buses and chassis, an increase of 14% compared to 2,032 in the preceding year. Order intake rose primarily for city buses in Europe, the Middle East and Africa. During the quarter 2,119 buses were delivered (1,983) an increase of 7% compared with the third quarter of 2007.

During the third quarter net sales increased by 7% to SEK 3,833 M (3,587). Adjusted for changed exchange rates net sales increased by 9%. Operating income was negative in an amount of SEK 72 M (neg. SEK 74 M) and the operating margin was a negative 1.9% (neg. 2.1%). Income was negatively affected by currency movements, primarily the significant depreciation of the Brazilian real, and unfavorable product and market mix. 

Volvo Buses’ global profitability program with focus on cost reductions continues, and in order to improve the efficiency of operations in Europe, Volvo Buses is restructuring its production in Finland. On October 1, the plant in Tampere was closed and at the same time the body plant in Turku was sold to new owners, who will manufacture the Volvo 9700 under license in the plant.

In Mexico and North America, the operations are adapted to current market demand. During the quarter a new, competitive product portfolio was introduced in Mexico. Preparations are underway for the expansion of city buses into the US, where a new plant in Plattsburgh, New York, is expected to be completed in the first quarter 2009 and production will be gradually ramped up for deliveries during the third quarter of 2009.

During the quarter, Volvo’s new hybrid bus was launched at the IAA trade show in Hannover, Germany. Customers, public authorities, journalists and competitors showed great interest in the new product. During the fourth quarter field tests with the new bus will begin in London, England and Gothenburg, Sweden.

Net sales by market area

Third quarter

 

First nine months

 

SEK M

2008

2007

Change in %

2008

2007

Change in %

Europe

1,551

1,748

(11)

5,326

5,402

(1)

North America

1,243

901

38

3,646

3,174

15

South America

369

376

(2)

876

956

(8)

Asia

469

373

26

1,389

1,329

5

Other markets

201

189

6

594

574

3

Total

3,833

3,587

7

11,831

11,435

3