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Volvo Group Representation, EU

Euro - Volvo Group position

Issue description
In 1999 the exchange rates were fixed for the first eleven euro countries. Greece joined in 2001. The physical use of the common currency euro in the twelve countries was introduced in January 2002.

Since 1999 the Swedish krona has fluctuated with over 20 per cent towards the euro. Over half of Sweden's foreign trade is with the countries using the euro, including Denmark, which has a parity exchange rate to the euro. Due to this large amount of trade with the euro countries 80 per cent of the Swedish companies invoice in euro, which means that the Swedish companies stand the exchange rate risk.

Sweden holds a referendum on September 14 on whether to join the EMU or not. The question asked is "Do you consider that Sweden should introduce the euro as currency in Sweden?" The answering options are yes or no.

In case there is a majority of votes for introducing the euro in Sweden the actual use of the euro would start in January 2006.

The impact on the Volvo Group
The amount of total sales is approximately 20 billion euros. More than half of Volvo's global turnover for 2002 is in Europe. Considering that the Swedish krona fluctuates more than 20 per cent to the euro the currency risk is costly and unpredictable. This also means that the value of Volvo's total exports varies accordingly.

Volvo Group's position

  • Volvo supports the facilitated movement of capital, goods, services and labour within the internal market that the use of a single currency will give
  • Volvo supports Sweden's joining the EMU and Sweden's use of the euro
  • The use of the euro eliminates both Volvo's currency risk towards the euro and the present cost for currency hedging
  • The use of the euro simplifies cross border business, gives stability and predictability to companies operating in Sweden
  • The reduction of currency risks and exchange rate costs will benefit both business results and Sweden as a whole