Cover page

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Cover page
Bruno Linsolas Purchasing Vice President , Volvo
Powertrain Corporation
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The Volvo Group Organisation
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Strong Product Renewal
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Strong Positions in all Business Areas
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The Volvo Group 2002, per Business Area, MSek
Sales
Operating Income
Trucks Volvo Volvo Volvo
Volvo Volvo Others Buses
CE Penta Aero Fin. Serv.
Operating income 2,837 MSEK
Total Sales 177,080 MSEK (-1)
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Sales Per Market Area 2002, 177 BSEK
Western Eastern North South
Asia Others Europe Europe America
America
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Global Truck Market PositionsHeavy Duty Vehicles
- 2002
1,000 units
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Significant Market Share Gains 1992-2002
Trucks gt16 t Europe Trucks Class 8 North
America Buses Europe Marine Leisure Europe
(-93) Excavators Globally (-95)
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Volvo Group - Key figures
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Volvo Powertrain Corporation
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Volvo Powertrain Organization
President and CEO Lars-Göran Moberg
CFO Mikael Kromli
Business Office Bertil Thorén
HR Communications Elisabeth Rocke
Mack Powertrain Div. Denis Leblond
Renault V.I. Powertrain Div. Philippe Divry
Volvo Division Sten-Åke Aronsson
Product Development Pierre Lecoq
Purchasing Bruno Linsolas
Manufacturing Sten-Åke Aronsson
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Volvo Powertrain Structure
Göteborg- Volvo Powertrain HQ- Volvo Division
HQ - RD - Purchasing
Köping - Transmissions
Hagerstown - Mack PTD HQ - Engines -
Transmissions - RD - Purchasing
Skövde - Engines - Foundry
Vénissieux/St Priest/Limoge - Renault V.I. PTD
HQ - Engines - Axles - Foundry - RD -
Purchasing
Employees Sweden 4.450 France 2.100 USA 1.200
Brasil 150
Curitiba - Engines
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Volvo Powertrain Strong Relative Position
Heavy Duty Diesel Engines 2002
Engine Production 2002, 9 - 18 liter (excluding
licensees / JVs) Source, Competitors Power
Systems Research (PSR) April 2003 update. Volvo
Powertrain Actual production figures.
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EnvironmentLegislative Demands - Emission
Standards
1996
Euro 2
EPA 02
Euro 3
Present level of technology
PM (Particulate Matter)
Euro 5
Euro 4
NOx
EPA 07
2010
EPA 10
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The Volvo Powertrain Strategy
Engines Consolidation to two engine platforms,
Medium Duty and Heavy Duty, with necessary
customer need adaptation
Transmissions and Axles Consolidation to an
optimised make/buy structure
Powertrain System Control Deliver outstanding
performance and develop different customer offers
by dressing and tuning

• Business Cycle Management In co-operation with
  suppliers create an industrial system with
  maximised flexibility and minimal investments, to
  take care of business cycle swings

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Medium and Heavy Duty Engine Consolidation
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Volvo Group future power range
Small block Medium block Big block
On-road
Non-road
On-road
MD16
On-road Non-road
On-road
Heavy Duty
MD13
On-road Non-road
On-road
MD9/MD11
On-road Non-road
On-road
MD5/MD7
Medium Duty
Non-road
MD4/MD6
hp
200
400
600
800
1000
0
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Reduction of Heavy Duty Engine part numbers
16000
14000
12000
10000
8000
6000
4000
2000
0
2007
2001
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Global Sourcing
Volvo business opportunities
With this new worldwide engine platform concept
Volvo is offering suppliers volumes at a new
level for commercial vehicles
OPPORTUNITY TO REACH A NEW DIMENSION
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Business Opportunities
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Critical Factors shaping up our future business
Mergers and Acquisitions Customer Legal/Politica
l Worldwide Economy
Fewer OEMs
Quality Cost -
Emissions Euro4/5, US 07/10
Emerging MarketsChina, India Russia
Fewer but WorldwideProducts

• High volumes (Close to car industry)
• Quality and Cost breakthrough
• Fewer suppliers and new relationship
• Early involvement
• Long term contracts
• Worldwide supply

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High volumes

• Leverage the size of our Group
• Maximum Synergies, Standardisation, Volume effect
• 2 Platforms Shared Worldwide by all Business
  Areas
• Heavy Duty Engine Platform (HDEP) 200 000/year
• Medium Duty Engine Platform (MDEP) with DEUTZ
  120 000/year
• Give a fantastic worldwide development
  opportunity for our supplier

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Give the customer what he needs More Quality,
Less cost

• Systematic functional specifications to translate
  customer needs in performance and characteristics
  send to potential suppliers
• Targets cost and quality targets systematically
  established to translate customer need
• 20 Cost decrease and Quality at the level of
  the best in the car industry.

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Early involvement in Product Development

• Allows our suppliers
• To understand the customer needs
• To share and commit on common quality, cost and
  performance targets
• To bring their knowledge, solutions and
  creativity at early project stage
• To save on shared costs (development,
  prototyping, testing and tooling) through
  synergies made on common working environment and
  design tools.

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Emerging Markets

• Huge growth potential for our Industry
• Development of our sales requires development of
  a local supplier base
• We strongly promote Joint Ventures or Cooperation
  between our current western suppliers and new
  local suppliers. We help our key suppliers in
  this way.
• Privileged relationships are developed in India
  and China
• Our suppliers need to have emerging markets
  partners

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Our supplier selection strategy

• Mono sourcing (each time it is possible) to
  leverage our size and our standardization effort
• Fewer suppliers selected for long term
• Selection on the best QDC and Performance offer
  through a disciplined corporate process Panel
  Committee Purchasing Strategies by segment
• Business approach
• with our suppliers

• Share goals and targets
• Cost understanding transparency
• Grab together new markets
• Long term contracts
• Worldwide competitiveness

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We build a new supplier relationship

• We are moving from " parts suppliers" to "
  components or subsystem suppliers"
• We are moving from "conventional" relations
  toward more long term partnership
• Suppliers are more deeply and early involved in
  our development process, to bring innovation and
  competitiveness

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What we expect from you

• Early involvement in development
• Targets cost achievement and cost transparency
• Quality breakthrough
• Meet our customer requirements
• Follow us on new Markets with local partners
• Support our operations worldwide

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What we offer you

• Develop and market your technology through early
  involvement in challenging projects
• Secured business through long term contracts
• Support for international development and
  Joint-Venture setting
• Gain together new markets and increase market
  share
• Build your future with a world industry leader in
  terms of technology and brand recognition