Volvo CEO states that the best is yet to come, and if true, we are in for some great new products.

The pace of change at Volvo Cars will remain undiminished in coming years despite recent success in tripling its operating profit in 2015 to SEK6.6bn, according to Håkan Samuelsson, president and chief executive.

Mr Samuelsson said he was proud to have reported that Volvo’s operating profit margin increased from 1.6 per cent in 2014 to 4 per cent in 2015, but pointed out that this was around half the level being generated by its competitors in the premium segment.

“Volvo’s transformation is nowhere near complete. The company’s revitalisation has been effective so far, but work remains to be done and we are entirely focused on the future. The next stage in Volvo’s expansion will be even more exciting than the first.”

Volvo is implementing a sweeping USD11bn transformation plan that has involved the development of its own modular vehicle architecture, a new engine range, global manufacturing capability, a completely renewed product range and world leading developments in safety, autonomous driving and connectivity.

But Mr Samuelsson made clear that despite these recent changes, the company retains an ambitious medium term expansion plan that will lead to an increase in sales, improved profitability, enhanced productivity and a position as one of the world’s leading premium car brands.

The following areas, among others, will be in focus in coming years:

Products

The next stage in Volvo’s transformation will be driven by a completely renewed product portfolio.

Larger 90 series and 60 series cars will be built on the Scalable Product Architecture (SPA) architecture. It will also implement a global small car strategy, introducing the quality and technical sophistication that is available on SPA to smaller cars on the Compact Modular Architecture (CMA).

“Our new expanded global range of smaller cars will improve and broaden Volvo’s presence in an important and growing market segment,” said Mr Samuelsson.

Sales

Volvo will continue to reposition its brand to compete with its global rivals, revive sales and operations in the US, continue to grow sales in China, double market share in Europe and overall reach sales of 800,000 cars globally.

“Both sales mix and profitability will improve as we roll out our new products,” said Mr Samuelsson.

Manufacturing

Volvo’s plant in Torslanda, Sweden, will in future make its 90 series top of the range cars as well as next generation 60 series, while its plant in Ghent, Belgium, will become a purely CMA plant for new 40 series cars. A new plant in the US will become operational in 2018 and make 60 series SPA based cars. The plants in China will make cars for domestic use and for export.

“We are developing a global industrial footprint that will mean we will primarily build cars in the regions in which we sell them. This is not only more efficient, but also provides a natural currency hedge,” said Mr Samuelsson.

Profitability

The company’s operating profit margin will double from today’s level and be brought in line with its competitors in the premium segment.

“This year will be another record year in terms of sales and profitability will also improve,” Mr Samuelsson said.

Electrification

Volvo will also position itself as a leading global maker of electrified vehicles, a series of four and three cylinder plug-in twin engine cars, offering world beating combinations of power and low emissions. Every range of cars it sells will have this option. It will also develop a new all-electric car by 2019.

“At least 10 per cent of annual sales will be electrified vehicles in the medium term,” said Mr Samuelsson.

Autonomous Driving

Volvo will start one of the world’s most advanced and ambitious autonomous driving vehicle test in Gothenburg, in 2017, with 100 real customers using AD cars in everyday life, paving the way for us to entrench its position as a global leader in AD technologies.

“We have stated that by 2020 no one should be seriously injured or killed in a new Volvo car. Autonomous driving is one key path to achieving this vision,” said Mr Samuelsson.

Costs

At the same time as revenues and profits are rising at Volvo, the company will retain a relentless focus on costs in order to ensure that it achieves its ambition of increasing its operating margin.

“We will grow, but we will not grow fat,” said Mr Samuelsson. “Improving productivity is always a priority. We have come a long way in the last five years, but we still have a long way to go.”

Volvo to consider producing small cars at it's Ghent, Belgium facility, as well as in China !

Volvo will build a new family of compact cars based on a common platform at its Belgian factory, CEO Hakan Samuelsson said. The cars will be developed with parent Zhejiang Geely Holding Group, Samuelsson said, and will also likely be built in China, although no decision has been reached on which of its plants will get the work.

"We have decided we will be using Ghent for Europe," Samuelsson said, referring to Volvo's factory in Ghent, Belgium. "In China, we have to look into this." Volvo currently builds the Volvo S60, V40 and XC60 models in Ghent.

Samuelsson said it was a "good guess" that the first Volvo vehicle to be built using the new platform, called the compact modular architecture (CMA), would be a new generation of the Volvo V40 hatchback, since it is the only compact that Volvo markets around the world now.

Samuelsson said Volvo's sales of smaller cars had always been too small to be profitable and the automaker needed a partner that could share the costs of developing and manufacturing a competitive vehicle.

China output

The executive said the automaker has three production options in China with Geely: two existing plants in the southwestern city of Chengdu and the northeast city of Daqing, or a new automobile assembly plant being built in Luqiao, a district of the eastern China city of Taizhou.

Two sources close to Geely said Volvo and its Chinese parent were likely to make cars based on the CMA platform together at the Luqiao plant.

Geely is expected to start producing an SUV based on CMA underpinnings at the Luqiao plant toward the end of 2016.

Volvo is also interested in using a common platform and powertrain technologies with Geely to come up with a small SUV, Samuelsson said.

"SUVs are growing in the world, so that is a good guess that something in that segment will be worth taking a look at," the CEO said.

Zhejiang Geely, which also owns black cab maker London Taxi Company, bought Volvo from Ford Motor Co. in 2010.

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