AutoTechInsight
Supplying Volvo
This report examines Volvo’s product and platform strategy, including the upcoming SPA and CMA platforms. The report also goes inside the Volvo’s purchasing strategy, including an in-depth interview with Lars Wrebo, Senior Vice President of Purchasing and Manufacturing at Volvo.
The report also looks at the company’s current manufacturing sites based in Sweden, its future production strategy for China, the relationship with parent company Geely, and looks at OEM-supplier relations. The report is backed up with IHS Automotive production forecasts for the Volvo brand; the industry standard for automotive forecasting and analysis.
About the Report
Volvo is both one of the most iconic and best-known Swedish brands and also the last remaining Swedish car company, following the demise of Saab. It is now owned by Geely of China, and although a relatively small company, compared to automotive giants such as VW, GM and Toyota, it is nonetheless now on a growth trajectory and in the process of establishing a global manufacturing network. In addition to its long-established factories in Sweden and Belgium, it now also has two new vehicle plants in China and an engine plant there too.The company has confirmed it will build a factory in the USA in the near future as well.
Volvo’s brand recognition derives in large part from its reputation for leading-edge safety technology and environmental compliance. It has long been seen, especially in the US, UK and some continental European markets, as the supplier of the archetypal middle class family car, especially its estate models. The advent of the original XC90 SUV and the subsequent smaller XC60 changed the company’s overall image somewhat, but the focus on safety remained paramount. In China, Geely wants to emphasise the premium nature of its vehicles, and with the growth of the Chinese market, especially for premium vehicles, there is every likelihood that the Chinese influence on Volvo’s future direction will increase.
Last year, Volvo’s global retail sales rose to nearly 467,000 units, rising from nearly 428,000 in 2013. Although production is growing in Europe and now in China, Volvo remains a relatively small player at under 500,000 units a year. It is planning to raise its annual production volume to over 800,000 units and possibly more once the North American plant is confirmed. As part of the Ford Premier Automotive Group (1999-2010), Volvo had benefited from the scale benefits from Ford’s global purchasing power and also a wide potential source of engines. Operating as an independent player, and even with Geely’s backing, Volvo has been on a process of re-inventing itself in many key areas, including increasing its manufacturing footprint, developing its own four-cylinder engines, and reorganising and expanding its purchasing department for example; the purchasing function had been subsumed within Ford Purchasing under Ford’s ownership, with a large number of key functions, especially cost analysis and estimating, having been transferred to Ford, reducing Volvo’s own capabilities in the area.
Introduction
Financial Overview
Volvo Cars, financial highlights 2014 vs. 2013
Volvo Cars, retail sales 2014 vs. 2013
Product and Platform Strategy
SPA
SPA models could represent as much as two-thirds of Volvo output, and possibly more
Europe and China will adopt the same manufacturing systems
90 cluster models will be at the heart of the new Volvo
Current Major Model Programmes
V40
S60/V60/XC60
V70/XC70
S80
XC90
Powertrain Strategy
New 4-cylinder engines
Modular concept
Downsizing strategy continues with 3-cylinder version
Reduced fuel emissions underpin Drive-E concept
Plug-in hybrids
Purchasing Strategy
Overview
Country risk assessment
Supplier awards and recognitions
Geographic split of purchasing
Interviews
Lars Wrebo, Senior Vice President, Purchasing and Manufacturing, Volvo Cars
Introduction and evolution of the purchasing function at Volvo
Size and scale of purchasing function
Government support
Implications of the new platforms for manufacturing
Directed sourcing, managing tier two suppliers
Supplier interview – Marcus Nyman, IAC
Production Strategy and Manufacturing Footprint
Introduction
A growing manufacturing network
Recent changes to logistics arrangements in Sweden and Belgium
Sweden
Gothenburg – Torslanda
Press shop
Body shop
Paint shop
Trim and assembly
In-house component assembly
Sequencing by suppliers
End of line finishing
Skovde engine plant
Floby component plant
Belgium
Ghent
Introduction
Suppliers and sequencing
Incoming logistics
China
Major new investment
Global quality standards
Teamwork is key
Employee training
Chengdu supplier network
Environmental compliance
Forward Model Program
Figures
Figure 1: Volvo XC90 safety cage
Figure 2: Volvo V40
Figure 3: Volvo S60
Figure 4: Volvo V70
Figure 5: Volvo S80
Figure 6: Volvo XC90
Tables
Table 1: Volvo Cars, financials 2014 vs. 2013
Table 2: Volvo Cars, retail sales 2014 vs. 2013
Table 3: Volvo Cars, global sales by model, 2014 vs. 2013
Table 4: Volvo vehicle production by fuel type
Table 5: IHS Automotive Volvo Production Forecast (2011–2018) by Nameplate
Table 6: Selected Suppliers on the new XC90
Table 7: Volvo: purchasing split by country
Table 8: IHS Automotive Volvo Production Forecast (2011–2018) by Country and Plant
Table 9: Suppliers at Volvo’s Ghent Plant
Table 10: Parts Volvo sequences at the Ghent Plant
Table 11: Volvo Forward Model Program
