Strong sales
and improved
earnings
Continued acceleration
in innovation and
investments
Geared for
growth
The trans form a-
tion towards
a fossil-free
society creates
opportunities
VOLVO GROUP ANNUAL REPORT
Driving prosperity
through transport
and infra structure
solutions
100%
FOSSIL-FREE
100%
MORE PRODUCTIVE
100%
SAFE
100%
The Volvo Group drives prosperity through transport and infrastruc-
ture solutions, offering trucks, buses, construction equipment,
power solutions for marine and industrial applications, financing
and services that increase our customers’ uptime and productivity.
Founded in 1927, the Volvo Group is committed to shaping
the future landscape of sustainable transport and infrastructure
solutions.
The Volvo Group is headquartered in Gothenburg, Sweden,
employs 104,000 people and serves cus tom ers in almost 190
markets. In 2023, net sales amounted to SEK 553 billion (EUR
48 billion). Volvo shares are listed on Nasdaq Stockholm.
Shaping the world we want to live in
Every day the Volvo Group’s products deliver food and medicine,
take children to schools, power irrigation systems and construct
roads and buildings. The majority of the Volvo Group’s customers
are companies within the transportation or infrastructure indus-
tries. The reliability and productivity of our products and services
are a key factor in their success and profitability.
Climate change, population growth and increasing urbanization
are shifting the landscape and expectations on transport and infra-
structure. In all our actions, we strive to consider how to reduce
climate impact, use the world’s resources more efficiently, and
conduct business more responsibly.
Together with our customers and supply chain partners, govern-
ments, societies and other stakeholders, we are moving quickly to
develop and introduce transport and infrastructure solutions that
aim to reach our sustainability targets.
Driving prosperity socially, environmentally and financially
means that we strive towards our vision of transport and infra-
structure solutions that are 100% safe, 100% fossil-free and
100% more productive.
In this annual report, we describe in more detail how we work
to achieve this.
VOLVO GROUP 2023
2
Overview
A global Group with strong positions ........ 2
Volvo Group in 2023 ....................... 4
CEO comments ........................... 8
14
Strategy
Our mission - Driving prosperity ........... 14
Consistency in delivery of
growth and profit ......................... 18
Sustainable transport and
infrastructure solutions ...................22
Strong assets a base for the transformation . 26
Group targets ............................28
32
Our Business
Sustainability impacts across
the value chain ...........................32
Driving prosperity for
many stakeholders .......................34
Volvo Group colleagues driving
the transformation........................36
An intensive year with new
products and collaborations ...............40
56
Board of
Directors’
Report 2023
Financial performance ....................56
Financial position .........................60
Cash flow statement ...................... 64
Changes in consolidated equity ............66
Financial management .................... 67
Segments ...............................68
The share ................................80
Risks and uncertainties ...................82
90
Notes to the
Financial
Statements
Notes to the financial statements ..........90
151
Parent
Company
Parent Company ........................ 151
163
Sustainability
Notes
Impacts, stakeholders and
material topics ..........................164
Climate ................................166
Environment ............................ 173
Employees and workforce ................ 179
Customer and end-user safety ............184
Human rights across the value chain .......185
Business ethics and compliance .......... 191
Complementary disclosures ..............193
194
Corporate
Governance
Report
Corporate Governance ................... 194
Board of Directors ...................... 202
Group Executive Board ................. 208
212
Other
Information
Proposed disposition of
unappropriated earnings .................212
Audit report for AB Volvo (publ) ...........213
Key Ratios ..............................218
Eleven-year summary .................... 221
Annual General Meeting ................ 229
Preliminary financial calendar ............ 229
The Volvo Group’s formal financial reports are presented on pages 56–162, 212 and 218–220 and have been audited by the company’s auditors.
Sustainability information is integrated in the sections Overview, Strategy and Our Business on pages 8–27 and 29–35, and in the Sustainability Notes on pages 163–193, and
has been subject to limited assurance by the Group’s auditors. For information on which pages constitute the Volvo Group’s Statutory Sustainability Report, please see page 56.
1
VOLVO GROUP 2023
CONTENT
A global group with
strong positions
Volvo Group is one of the world’s leading manufacturers
of trucks, buses, construction equipment as well as
marine and industrial engines. The Group also provides
complete solutions for financing and service.
People – our most important asset
The Volvo Group’s 104,000 employees are our most important
asset. In the words of CEO Martin Lundstedt: “Succeeding in this
industry is all about people, and our people make the difference.”
Strong brands
The Volvo Group sells its products under the Volvo, Volvo Penta,
Rokbak, Renault Trucks, Prevost, Nova Bus, Mack and Arquus
brands. We also partner in alliances and joint ventures in SDLG,
Milence, Eicher, Dongfeng and cellcentric. By offering products
and services under different brands, we address many different
customer and market segments around the world.
Competitive products and leading technology
The Volvo Group’s products have been developed to contribute to
efficient transport and infrastructure solutions and to provide our
customers with reliable uptime. We drive the development of elec-
trified vehicles and machines as well as automated solutions for
the benefit of customers, society and the environment. Sales of
vehicles and machines build a population of products that requires
spare parts and services.
Partnerships and collaborations with leading companies
New technologies are developing at a faster pace than ever before.
Staying at the forefront is vital to be successful, and that is why
we work in collaborations and partnerships with other leading
companies. We have a strategic alliance with Isuzu Motors. We
have partnered with Samsung SDI on batteries. We have estab-
lished cellcentric together with Daimler Truck to commercialize
fuel cell systems for heavy-duty vehicles and other use cases.
We work together with Aurora on autonomous vehicles. And we
are pioneering a European high- performance charging network
for heavy-duty trucks and coaches called Milence together with
Daimler Truck and Traton Group.
104,000
employees
SEK 553 bn
in net sales
Sales in almost
190
markets
Production in
18
countries
World-class services
In addition to vehicles and machines, our offering includes various
types of services such as financing, insurance, rentals, spare parts,
repairs, preventive maintenance, service agreements and assis-
tance services. The range and flexibility of the offering means that
solutions can be tailor-made for each customer to secure uptime
and productivity. The service business contributes to balancing
the fluctuations in the sales of new products and improving profit-
ability over the business cycle. Growing the service business is an
area of priority.
Strong positions globally
Thanks to competitive product programs, strong dealers with
extensive service networks and increasingly more complete offer-
ings, the Volvo Group has established leading positions globally.
These positions provide for economies of scale in product develop-
ment, production, purchasing and financial services.
2
VOLVO GROUP 2023
OVERVIEW
3
VOLVO GROUP 2023
OVERVIEW
Strong financial
performance in 2023
Currency-adjusted net sales increased by 11%
to SEK 553 billion, with a strong growth in both
vehicle and service sales.
Improved profitability – the adjusted operating
income increased to SEK 77,638 M (50,467).
For more information on adjustments, please
see Key Ratios on page 218.
The adjusted operating margin improved to
14.0% (10.7).
Reported operating income amounted to SEK
66,784 M (45,712).
Earnings per share rose to SEK 24.50 (16.09).
Net sales by revenue type, % Net sales by market, %
Vehicles 77
Services 23
Europe 43
North America 30
South America 9
Asia 12
Africa and Oceania 6
Strong operating cash flow in the Industrial
Operations of SEK 45.8 billion (35.3).
Return on capital employed in the Industrial
Operations improved to 36.7% (27.4).
Continued high pace in the transformation with
an expansion of the offer of electric vehicles
and machines. All business areas are in serial
production of heavy-duty electric vehicles and
machines.
The Board of Directors proposes an ordinary
dividend of SEK 7.50 (7.00) per share and an
extra dividend of SEK 10.50 (7.00) per share.
4
VOLVO GROUP 2023
OVERVIEW
5
VOLVO GROUP 2023
OVERVIEW
Volvo Group
Net sales, SEK bn Adjusted operating
income
1
and Adjusted
operating margin
Operating income,
SEK bn
Operating margin, %
Return on capital
employed
Industrial Operations,
%
Operating cash flow
Industrial Operations,
SEK bn
Net financial position
excl. post- employ ment
benefits and lease
liabilities Industrial
Operations, SEK bn
2021
2019
2023
552.8
2021
2019
2023
14.0
77.6
2021
2019
2023
36.7
2021
2019
2023
45.8
2021
2019
2023
83.4
2023 2022
Net sales, SEK M 552,764 473,479
Adjusted operating income
1
, SEK M 77,638 50,467
Adjusted operating margin, % 14.0 10.7
Operating income, SEK M 66,784 45,712
Operating margin, % 12.1 9.7
Income after financial items, SEK M 66,726 45,077
Income for the period, SEK M 49,932 32,969
Earnings per share, SEK 24.50 16.09
Dividend, SEK per share 18.00
2
14.00
3
Operating cash flow, Industrial Operations, SEK M 45,821 35,327
Net financial position excl. provisions for post-employment benefits and lease liabilities, Industrial Operations, SEK bn 83.4 73.9
Return on capital employed, Industrial Operations, % 36.7 27.4
Return on equity, Financial Services, % 13.0 –0.3
Return on equity excluding Russia and Belarus, Financial Services, % 13.9 15.4
Return on shareholders’ equity, Volvo Group, % 28.7 20.7
Total number of employees 104,147 102,155
Share of women, % 22 22
Share of women, presidents and other senior executives, % 29 28
Energy use per net sales, Industrial Operations, MWh/SEK M 4.4 5.1
Total CO₂ emissions per net sales, Industrial Operations, tons/SEK M (scope 1 & 2) 0.6 0.7
Share of direct material purchasing spend from suppliers having made a CSR self- assessment, % 93 89
1 For more information on adjusted operating income, please see Key Ratios on page 218.
2 Proposed by the Board of Directors to the Annual General Meeting 2024. SEK 7.50 per share in ordinary dividend and SEK 10.50 per share in extra dividend.
3 SEK 7.00 per share in ordinary dividend and SEK 7.00 per share in extra dividend.
Unless otherwise stated, all comparisons refer to the same period or the same date of the preceding year.
Key ratios
6
VOLVO GROUP 2023
OVERVIEW
Net sales, SEK M Share of Group net sales, %
Adjusted operating
income
1
, SEK M
Adjusted operating
margin, %
TRUCKS
Volvo Trucks, Renault Trucks, Mack Trucks,
Volvo Autonomous Solutions, Volvo Energy,
VE Commercial Vehicles (46% ownership),
Dongfeng Commercial Vehicles (45%),
cellcentric (50%) and Milence (33%).
373,048
67
55,394 14.8
CONSTRUCTION EQUIPMENT
Volvo Construction Equipment, Rokbak
and SDLG (70%).
104,981
19
16,993 16.2
BUSES
Volvo Buses and Prevost.
22,423
4
1,059 4.7
VOLVO PENTA
Engines and power systems for
marine and industrial applications.
21,006
4
3,230 15.4
FINANCIAL SERVICES
Provides financial services to
customers and dealers.
24,012
4
3,855 N/A
GROUP FUNCTIONS & OTHER
2
Nova Bus, Arquus and common
business support functions.
16,809
–2,950 N/A
1 For more information on adjusted operating income, please see Key Ratios on page 218.
2 Including Group eliminations.
More information about the Volvo Group’s segments and how they are reported can be found in Note 6 to the Financial Statements.
Segments
2
7
VOLVO GROUP 2023
OVERVIEW
Strong performance
providing solid
foundation for the
transformation
D
uring 2023, dedicated colleagues across the Volvo
Group worked hard to keep our customer commit-
ments and reduce the lead times as we delivered
from the backlogs of vehicles and machines that have
been extended since the pandemic. It was also a year
characterized by geopolitical turmoil, continued supply chain dis-
turbances and cost inflation. In these challenging circumstances,
the Volvo Group continued to deliver strong growth, profitability
and cash flow.
Our currency-adjusted net sales grew by 11% to SEK 552.8 bil-
lion, with sales of vehicles and machines increasing by 12% and
services by 10%. Sales increased in all regions except South America.
We improved our adjusted operating income to SEK 77.6 billion
(50.5), corresponding to an adjusted operating margin of 14.0%
(10.7). Both sales and profitability were at all-time highs.
What is more, we also continued to take important steps on our
journey to decarbonize the transport and infrastructure industries.
All business areas are in serial production of heavy-duty electric
vehicles and machines and we are also expanding the ecosystem
necessary to drive the transformation. In this changing landscape,
we can provide increased value for our customers and take advan-
tage of the long-term growth opportunities that come with electri-
fication, autonomous solutions and new productivity services.
A strong 2023
Thanks to a strong commercial focus, we were successful in improv-
ing margins while managing cost inflation and disturbances in the
supply chain that continued for most of the year and affected both
productivity and costs. Despite these disturbances, our truck busi-
ness delivered 246,272 vehicles, which was an increase of 6%
compared with the previous year. This is a new all-time-high and
the result of hard work by colleagues in the Group and across the
value chain. We have a strong base with good deliveries across
regions, strengthened positions in many markets, leading customer
satisfaction and good product quality. Although our customers’
utilization of their fleets came down somewhat compared with the
very strong 2022, it continued to be on historically high levels in
our major markets. Our truck business took advantage of the good
demand for both new and used trucks as well as for spare parts
and services and increased the currency-adjusted net sales
by 14% to SEK 373.0 billion. The adjusted operating margin
improved to 14.8% (10.9).
Our truck operations continued the rollout of improved electric
trucks and supporting services and started testing fuel cell-electric
trucks on public roads.
In 2023, the construction equipment market outside of China
was more or less on the same level as the preceding year. There
was a good development in the first half of the year and a weaker
second half in both North America and Europe. In China the down-
ward pressure continued. There is uncertainty about the near-term
development due to higher interest rates and lower economic
growth, but in the long term many countries must not only renew
an aging infrastructure but also expand it as populations and econ-
omies grow. Volvo Construction Equipment’s (Volvo CE) currency-
adjusted net sales increased by 1% to SEK 105.0 billion, despite
deliveries of Volvo-branded machines decreasing by 3% and deliv-
eries from our SDLG brand in China going down by 48%. The
adjusted operating margin improved to 16.2% (13.2).
Volvo CE continued to drive the transformation with the launch of
several electric products of different sizes and supporting services
into more markets. We also announced an investment in battery
pack production at the excavator plant in Changwon, South Korea.
Furthermore, a new dedicated business unit for compact machines
and solutions was established, with the aim of driving growth and
profitability in this important and growing segment.
Demand for buses continued to improve, particularly for coaches
and on the service side as travel kept increasing. Currency-adjusted
net sales in the Buses segment rose by 15% and amounted to
SEK 22.4 billion. The underlying profitability improved, with an
adjusted operating margin of 4.7% (1.9).
On the city bus side of the business, demand for electric buses
continued to increase and Volvo Buses continued the rollout of
its global all-electric BZL chassis. During the year, we decided to
restructure the business model for Volvo Buses in Europe and for
8
VOLVO GROUP 2023
OVERVIEW
“ Decarbonizing the
transport and infrastruc-
ture industries is a criti-
cal step toward a more
sustainable future.”
Nova Bus in North America to structurally improve competitive-
ness and profitability.
For Volvo Penta, demand on both the marine and industrial side
was good in the beginning of 2023, but weakened during the
course of the year, particularly for smaller boats. For the full year,
sales of both engines and services grew, with currency-adjusted
net sales increasing by 10% to SEK 21.0 billion. The adjusted oper-
ating margin increased to 15.4% (14.0).
Volvo Penta broadened its electric portfolio on the industrial side
with battery-based energy storage solutions and the electrification
of applications in material handling and construction. On the marine
side, the Innovation Award-winning Joystick Docking was introduced
and the successful Inboard Performance System was expanded into
larger vessels.
For our customer-financing business, Volvo Financial Services,
the good customer activity levels were reflected in low credit pro-
vision expenses and a stable portfolio performance. The adjusted
operating income increased to SEK 3,855 M and the return on
equity was 13.0% (–0.3).
In addition to the strong growth and continued good profitability,
return on capital employed in the Industrial Operations increased to
36.7% (27.4). We also generated a strong operating cash flow of
SEK 45.8 billion (35.3). At year-end, we had net financial assets
of SEK 83.4 billion in the Industrial Operations, pension and lease
liabilities excluded. Our strong performance allows us to both
continue to provide our shareholders with a good return on their
investments and at the same time fund the activities that are driving
the transformation of our industries to more sustainable solutions.
The Board of Directors proposes an ordinary dividend of SEK 7.50
(7.00) per share and an extra dividend of SEK 10.50 (7.00) per share.
Improving performance and driving the long-term strategy
We are working with several strategic priorities to capture growth
opportunities and improve our underlying performance. One area
of priority is the service business, because it contributes to increasing
our customers’ uptime and productivity and strengthens our relation-
ship with them. Furthermore, it provides stability to the Group’s
earnings over the business cycle.
9
VOLVO GROUP 2023
OVERVIEW
Another important area is to continue to strengthen our North
American truck business. We have made great progress in improving
profitability over the business cycle in North America, not least thanks
to a stronger service business, and now we are taking the next step. In
the beginning of 2024, Volvo Trucks launched an all-new platform as
the base for a range of new truck models with all upcoming technol-
ogies such as battery-electric, fuel cell-electric and internal com-
bustions engines running on renewable fuels including hydrogen.
We are starting with a new version of our best-selling Volvo VNL
model. We are confident that this new platform is a game-changer
with class-leading energy efficiency.
A third focus area is to drive leadership in zero-emission vehi-
cles, where we have established a strong position thanks to being
early out in launching a wide range of electric vehicles and machines.
Step by step we are improving our electric products in terms of
increased ranges, shorter charging times and new active safety
features. We are also continuously expanding our comprehensive
ecosystem of charging infrastructure, route simulation services,
maintenance and repair and financial solutions to make our
customers’ adoption of electric vehicles as easy as possible.
We also maintain focus on our long-term vision to offer solu-
tions that are 100% safe, 100% fossil-free and 100% more pro-
ductive. We have set climate targets in line with what the latest
climate science deems necessary to keep global warming at a
maximum 1.5 °C and our pathway to reach the goals of the Paris
Agreement have been validated by the Science Based Targets
initiative. And we have continued to strengthen our work with the
principles of the UN Global Compact regarding people, business
ethics and the environment.
We know that we are at the early stages of a long journey, but
we also know that the transport and infrastructure industries are
vital in driving sustainable growth. Their pivotal roles lie not only
in their capacity to reduce emissions but also in their potential to
drive transformative change and sustainable development. Our
customers use our products and services to move goods and
materials, help people get to work or school and build and main-
tain the infrastructure we all rely on every day. With a growing
world population, increasing urbanization and growing e-com-
merce, the demand for transport and infrastructure will continue
to increase. We will meet this demand with solutions that are con-
siderably more sustainable, more productive and safer than today.
We have already begun this journey together with a growing num-
ber of customers. The shift to a decarbonized transport system is
a unique growth opportunity for us as a Group, while at the same
time enabling us to have a positive impact on our customers’ busi-
nesses and on society.
The transformation to electric products goes hand in hand with
our strategy to offer our customers complete solutions that bring
them both value and peace of mind. It is about really understand-
ing our customers’ businesses and providing complete packages
with equipment, financing, service contracts, insurance, uptime
and productivity services, and in the case of electric solutions also
charging capabilities and battery optimization. This is an opportu-
nity for us to deepen our engagement with our customers’ busi-
nesses and to build true partnerships over time.
As our customers begin their journey towards net-zero, many of
them realize that transports make up a substantial part of their car-
bon footprint. More than 7,000 companies have signed up to the
Science Based Target initiative and this creates a positive pressure
for change in the value chains. Acting as advisors and solutions pro-
viders, we work together with our customers – and sometimes with
their customers – to help them decarbonize their transport systems.
This shift will gain further momentum in the coming years when
these companies are looking to deliver on their own Science Based
Target commitments for 2030.
Three-pronged approach on the road to net-zero
On our road to net-zero, we are developing multiple solutions in
parallel because we believe that there is no silver bullet that will
solve the climate challenge. Therefore, we are investing consider-
able resources in developing both battery-electric and fuel-cell
electric technologies as well as internal combustion engines run-
ning on low carbon fuels. It is important to remember that these
technologies will complement each other, not compete. The Volvo
Group has been instrumental in creating a market for electric
trucks and construction equipment that did not exist only a few
years ago. Today, electric trucks, buses and construction machines
are part of our core business. So, customers looking to transition
away from fossil fuels do not have to wait and see which technol-
ogy will “win” – they can start looking at available options in their
local market today. The solution they are looking for to cut carbon
emissions is in most cases already available from the Volvo Group.
The involvement of other stakeholders and partnerships are key
success factors, and we truly believe that it is only by moving for-
ward together that we can make a positive impact on our climate
and facilitate a green economy. To accelerate the rate of change
even further, we are working with partners in a number of key
areas, ranging from our strategic alliance with Isuzu Motors, with
Samsung SDI on batteries, our joint venture with Daimler Truck on
fuel cells, cellcentric, and our partnership with Daimler Truck and
the Traton Group on charging infrastructure in Europe, Milence.
We are convinced that our commitment to decarbonization will
lead to increased revenues. The main driver is the higher value of
the electric vehicles and machines and increased service contract
penetration and duration. Revenue growth will also be supported
by increased revenues from autonomous solutions, new digital
services and services connected to energy solutions. This is a
great opportunity for us, as the shift drives systems thinking,
where the vehicle and machine is one part of a total solution
encompassing charging infrastructure, battery optimization,
maintenance, financing and other value-adding services.
Many milestones passed during the year
We were early out in the transformation, starting with hybrid-
electric city buses more than ten years ago and have been on
a steady development and improvement journey since then.
In 2023 deliveries of fully electric vehicles and machines grew
by 128% to 4,996 units, albeit from low volumes.
We are producing our electric trucks on the same lines as con-
ventional trucks, enabling us to utilize our existing industrial foot-
print and draw on the vast knowledge and experience of our tal-
ented colleagues in operations. Volvo Trucks has a broad electric
line-up with a total of six electric trucks designed to handle a wide
variety of transport assignments. In Q4, Renault Trucks started
serial production of heavy-duty electric trucks for regional trans-
port and construction, complementing their successful electric
10
VOLVO GROUP 2023
OVERVIEW
light- and medium-duty trucks. Our electric trucks are developed
with our customers’ diverse operations in mind. Proof that they
are already creating value came when the Volvo FH Electric was
selected as “International Truck of the Year 2024”. It was the first
time ever that an electric truck won the award.
In 2022, we showcased our future fuel cell electric trucks, and
in 2023 we tested them on public roads for the first time. These
zero exhaust emission trucks will be especially suitable for longer
distances and when using only batteries is not an option, for
example in areas with insufficient charging infrastructure. But
hydrogen is not limited to fuel cells, we also see great potential
in using green hydrogen in the internal combustion engine.
There is a growing demand for clean, efficient, and safe urban
transportation that we can tap into. In October, we announced that
we will join forces with Renault Group and CMA CGM Group to
address this demand with an all-new generation of fully electric
and software-defined vans and associated services. Production
is planned to start in 2026.
Batteries are crucial for the electrification journey. We are already
assembling battery modules into battery packs in-house and we are
taking further steps in the value chain with the start of production
of battery modules. In 2023, we had a groundbreaking ceremony
for our planned battery cell plant in Mariestad, Sweden and with
the acquisition of the business and assets of the Proterra Powered
business unit we fast forward the establishment of a battery value
chain in North America. With the acquisition, we will both comple-
ment the current and accelerate our future battery-electric road map.
In this annual report you can read more about these important
events and other achievements during a very intense year.
A solid foundation to build on
Decarbonizing the transport and infrastructure industries is a
critical step toward a more sustainable future. This transformation
requires collaborative efforts from companies, industries, commu-
nities, and governments worldwide. We in the Volvo Group are
determined to be a positive force in this shift with our ever more
efficient transport and infrastructure solutions.
We have been successful in building a solid foundation with
a strong financial position, customer satisfaction and relations,
industrial backbone, technology, products and services and – most
importantly – people. I would like to extend my gratitude to all col-
leagues and business partners for their hard work and dedication.
I have said it before, but it is worth repeating: succeeding in this
industry is all about people, and our people make the difference.
Martin Lundstedt
President and CEO
Our strong perfor-
mance allows us to
both provide our
shareholders with
a good return on
their investments
and at the same
time fund the
activities that are
driving the trans-
formation of our
industries to more
sustainable solu-
tions.
11
VOLVO GROUP 2023
OVERVIEW
12
VOLVO GROUP 2023
OVERVIEW
Renault Trucks E-Tech
In 2023, Renault Trucks expanded its all-
electric range with the start of sales and
production of two new models of up to 44
tonnes, namely the Renault Trucks T E-Tech
for regional transport and the Renault Trucks
C E-Tech for the construction industry.
Read more on page 51.
13
VOLVO GROUP 2023
OVERVIEW
STRATEGY
Our mission
– driving prosperity
Our mission is to drive prosperity through our transport and
infrastructure solutions. Our vision is to be the most desired
and successful provider in our industries, across the globe.
We develop our products, services and solutions to create value
for our customers, to contribute to the well-being and safety of
people and to sustainable societies. By doing so, we also create
value for our shareholders.
We aspire to deliver leading customer satisfaction for all brands
in their segments; to be the most admired employer in the indus-
try, and to have industry-leading profitability. The Group’s values,
Customer success, Trust, Passion, Change and Performance,
serve as a guide to our day-to-day behavior and drive decisions on
all levels of the organization. Our Code of Conduct outlines how
we in the Volvo Group do business: ethically and in compliance
with the law.
ASPIRATIONS
VALUES
CODE OF CONDUCT
VISION
MISSION
VOLVO
GROUP
Driving prosperity through
transport and infrastructure solutions
Be the most desired and successful transport
and infrastructure solution provider in the world
Customer success Trust Passion Change Performance
We respect
and care for
one another
We earn business
fairly and lawfully
We safeguard
company information
and assets
We separate personal
interests from
business activities
We communicate
transparently
and responsibly
Have leading customer satisfaction
for all brands in their segments
Be the most admired
employer in our industry
Have industry
leading profitability
14
VOLVO GROUP 2023
Seven strategic priorities
In addition to the mission, vision, aspirations, values and Code
of Conduct we have decided on seven strategic priorities to cap-
ture growth opportunities and improve underlying performance.
The strategic priorities provide the overall direction and act as a
guide in our decision-making, but should not be seen as a detailed
action plan. The order in which the priorities are presented does
not reflect their relative importance.
Providing peace of mind for our customers
To be successful the key is to create value for our customers by
impacting their bottom line profitability. By understanding our
customers’ priorities and challenges, we can provide products,
services and solutions that grow their revenues and decrease
their costs. This is the basis for our strategic direction.
Our holistic approach to supporting our customers and their
business needs is built upon a strong foundation of products,
services and total solutions. Our aim is to help our customers to
maximize their uptime and productivity. We do this in several ways.
World-class products
The Volvo Group sells its products under the Volvo, Volvo Penta,
Rokbak, Renault Trucks, Prevost, Nova Bus, Mack and Arquus
brands. We also partner in alliances and joint ventures in SDLG,
Seven strategic priorities – balancing perform and transform
Transform the Volvo Group to become a leading end-
to-end integrator and offer easy-to-integrate prod-
ucts and services through strong brands.
1
Grow the service business and target selected industry
verticals offering a portfolio of tailor-made solutions.
2
Secure a desirable and sustainable product and service
portfolio with the right quality, leveraging new and
well-known technologies, CAST (Common Architec-
ture and Shared Techology), partnerships, and digital
innovation – accelerating electromobility solutions.
3
Grow in Asia and the US: In Asia through JVs, alliances
and by strengthening the Volvo Group footprint in
China. In the US by significantly improving the Group’s
market position.
4
Develop robust profitability throughout the decentral-
ized regional value chains by leveraging global scale,
digitalization, a purpose-fit footprint and continuous
improvement using the Volvo Performance System.
5
Selectively capture, accelerate and scale-up new
businesses and develop competencies and capabili-
ties needed.
6
Reinforce value-based leadership and ways of
working where all colleagues are empowered to
take action and are accountable for the results.
7
15
VOLVO GROUP 2023
STRATEGY
Milence, Eicher, Dongfeng and cellcentric. By offering products
and services under different brands, we address many different
customer and market segments around the world.
The Volvo Group’s products have been developed to contribute
to efficient transport and infrastructure solutions and to provide
our customers with reliable uptime. We drive the development of
electrified vehicles and machines as well as automated solutions
for the benefit of customers, society and the environment. Sales of
vehicles and machines build a population of products that requires
spare parts and services.
World-class services
In addition to vehicles and machines, our offering includes various
types of services such as financing, insurance, rentals, spare parts,
repairs, preventive maintenance, service contracts and assistance
services. We also offer batteries and battery optimization, route
simulation and charging services. The range and flexibility of the
offering means that solutions can be tailor-made for each cus-
tomer to secure uptime and productivity. The service business
contributes to balancing the fluctuations in the sales of new prod-
ucts and improving profitability over the business cycle. Growing
the service business is an area of priority.
Total solutions
Digital services
Vehicles and machines
Tires & super-
structure services
Insurance
Charging services
Financing
Service contracts
Route simulation
Batteries & optimization
16
VOLVO GROUP 2023
STRATEGY
17
VOLVO GROUP 2023
STRATEGY
Consistency in delivery
of both growth and profit
The performance of the Volvo Group has improved substantially during
the last few years. Our focus has been on gradual and consistent earnings
improvement, reduced volatility in earnings and cash flow, as well as
allocating capital in a disciplined way.
We have great assets in our people, products, and services, as well
as production sites, well-established dealer networks and customer
relations. We have strong finances and are in a good position to be
able to invest further in new technologies. Our aim is to excel on the
basics and build resilience. This is key to our long-term profitability.
Growing service business
Our financial performance is ultimately decided by how close we
work with our customers and how successful we are in providing
peace of mind to them. A good indicator of this is the development
of our service sales. In 2023, net sales in the service business
amounted to SEK 127.5 billion, equivalent to 23% of Group net
sales. The compounded annual growth rate in the service business
has been 5% over the last five years. A stronger service relation
and growing service business support our profitability throughout
the business cycle. This is an area of priority for the Volvo Group.
To continue growing our service business we will focus on the
untapped potential that exists both in terms of market share and
in terms of increasing the sales of spare parts, workshop hours,
financing, insurance and uptime services. Around 2.1 million trucks,
700,000 construction machines and 80,000 buses have been
produced by the Volvo Group in the last ten years, of which many
are connected. With these as a base we can extend our service
offer and increase the uptime and productivity to the benefit of our
customers.
Transformation accelerating growth
Over the last decade, the Volvo Group has established industry-
leading profitability and a strong return on capital employed and
is now taking the next step on its strategic journey. The need for
transportation is increasing as are the investments in infrastructure,
and the drivers of transformation within our industries are clear.
Today’s trucks and construction machines are not used to their
full capacity due to e.g. congestion, insufficient route planning and
low fill rates. However, with current infrastructure, a fully loaded
Good growth in service sales
Growing the service business is an
area of priority. In 2023, net sales
of services amounted to SEK 127.5
billion, corresponding to 23% of
the Group’s total sales.
Net sales of services, SEK bn
2021 202220202019 2023
127.5
Improved through-cycle earnings resilience
Profitability has improved in recent
years. In 2023, the adjusted operating
income amounted to SEK 77.6 billion
with an adjusted operating margin of
14.0% (10.7). In 2019–2023 the aver-
age adjusted operating margin was
10.4%.
Adjusted operating income, SEK bn
Adjusted operating margin, %
2021 202220202019 2023
77.6
14.0
Strong financial position
The Group’s financial position is strong
with a net cash position in the Industrial
Operations of SEK 83.4 billion excluding
post- employment benefits and lease
liabilities at year-end 2023.
Net financial position
Industrial Operations, SEK bn
20212020 2022
2019
2023
83.4
18
VOLVO GROUP 2023
STRATEGY
truck operating on diesel is one of the most energy-efficient ways of
transporting goods on our roads. The same is true for construction
equipment in current applications. However, our view is that battery-
electric and fuel cell-electric vehicles and machines as well as
products with internal combustion engines running on different
types of renewable fuels are the future. These offers will be further
developed to meet upcoming stringent CO
2
regulations and our
customers’ increased demand for sustainable alternatives.
When it comes to safety aspects, it is a fact that people lose
their lives or are injured in traffic and on work sites with human
error by far being the main reason. It is also a fact that people and
goods spend a lot of time in
congestion. Our daily life pattern and
non-optimized infrastructure and logistics models result both in
temporary congestions and at other times heavily underutilized
road networks. We continuously invest in products and services
that offer safer, more sustainable and more productive solutions
to our customers. To accelerate this development, we have also
invested in new business models and new technology in recent
years, with Volvo Autonomous Solutions (V.A.S.) and Volvo Energy
as two examples.
V.A.S. develops commercially viable solutions for on- and off-road
applications. Our autonomous solutions make our customers’ opera-
tions more safe, productive and sustainable. Volvo Energy will offer
Perform to finance the transformation
Transform Perform
both public and private charging solutions, energy storage, battery
optimization and battery lifecycle management.
We transform our business to provide even greater value to our
customers and respond to the need for transport and infrastructure
solutions that are safe, more sustainable and more productive.
The Volvo Group has a good initial market position in electric vehi-
cles and machines and the focus is on accelerating the commercial-
ization of new technologies and business models to get traction and
Over the last decade, the Volvo Group has established an industry-leading level of profitability and is now taking the next step on its
strategic journey. Growth is expected to accelerate with the main driver being the higher value of electric vehicles and machines.
Gradual and
consistant
earnings
improvement
Reduced
volatility in
earnings and
cash flow
Discipline
in capital
allocation/
investments
Continuous
investments in
new business
models by inno-
vation and new
technol-
ogies
Transformation
accelerating
growth
Delivering on our financial ambitions and strategic direction
19
VOLVO GROUP 2023
STRATEGY
impact. The transformation is expected to accelerate our growth
with the main driver being the higher value built into the electric
vehicles and machines.
Geared for growth
At Volvo Group we are committed to offering the flexible services
and solutions our customers need to build their business in the
smartest way possible. The shift to electric equipment drives
system thinking, where the truck or machine is one part of a total
solution encompassing charging infrastructure, battery optimiza-
tion, maintenance, financing and value-adding services.
For us, this transition brings a deeper, broader, and more long-
term engagement in our customers’ business. It also provides a
significant opportunity for growth. We estimate that there is a
potential to increase our revenues by more than 50% over the life-
cycle of a product when comparing an electric vehicle to a conven-
tional version. This is primarily based on the increased sales values
of electric vehicles and machines but also on increased revenues
from autonomous solutions, new digital services and services
connected to energy solutions. Other factors expected to drive
growth are increased service contract penetration and an increase
in the duration of the contracts.
We also believe that autonomous solutions have the potential
to bring a wide range of benefits to society. The introduction of
self-driving vehicles and machines opens the way for transport
systems that have a significantly reduced impact on the climate,
are more productive, more energy efficient and safer. Since 2020,
the Volvo Group has a business area, Volvo Autonomous Solutions,
focused on developing and commercializing industrial autonomous
transport solutions.
Although autonomous solutions are in relatively early phases,
we believe that they may offer a significant growth opportunity as
they tap into substantial revenue pools that we have not previously
addressed. Instead of selling a truck or machine, we can provide
customers with complete transport systems, driving productivity
for them and revenues for the Volvo Group.
Enabling conditions
The transition to net-zero emissions in the transport and infra-
structure industries will depend on a variety of factors. In addition
to the availability of the Volvo Group’s product and service offering
but, there are external factors such as the existence of a functioning
charging infrastructure and access to renewable energy sources
to power battery-electric and fuel cell-electric products. Customer
demand in different markets will also depend on factors such as
governmental incentives for green technologies and the price
of fossil fuel.
Clear opportunity for growth
Ambition for
tomorrow
TodayYesterday
>10%
Operating margin
Sales
CAGR %
≈3%
pre-covid
• Capturing industry growth
• Untapped service potential
• Electric vehicles and machines
– higher sales value
– increased market shares
– increased service contract
penetration and duration
• Autonomous solutions
• Energy services
• Digital services
20
VOLVO GROUP 2023
STRATEGY
21
VOLVO GROUP 2023
STRATEGY
Sustainable transport and
infrastructure solutions
Transport of people and goods are essential for economic and social
development. With a growing global population, rapid urbanization
and increasing e-commerce, demand for transport and infrastructure
are expected to continue to increase. We must meet this demand
with products, services and solutions that are more sustainable.
The Volvo Group is a leading force in the shift towards the electrifica-
tion of the transportation and infrastructure industries, making a real
impact on our customers’ efforts to reduce their carbon footprint.
It is our long-term vision to offer solutions that are:
100% safe
100% fossil-free
100% more productive.
Safe
Safe because we cannot accept a situation where, every year, peo-
ple are killed and injured on roads and work sites. Safety is about
putting people at the center of everything we do. We have a vision
of zero accidents with Volvo Group products and in our own oper-
ations. We work proactively with our partners and with society
to develop intelligent solutions that not only mitigate the conse-
quences of accidents but strive to avoid them altogether. And, of
course, safety is a prerequisite for vehicle uptime and increased
productivity.
Fossil free
Fossil free because climate change is the challenge of our genera-
tion. We are enabling our customers to be leaders in the shift
towards a decarbonized transport system. We offer fully electric
solutions ranging from compact excavators to city buses and heavy-
duty trucks with zero greenhouse gas tailpipe emissions and pro-
vide our customers a fast-track to emission reduction, while man-
aging total investment and cost of operation parameters.
More productive
More productive because that will help us meet the growing
demand for transport and infrastructure while staying within the
boundaries of what our planet can sustain. Many transports are
run with half-empty loads. By optimizing flows and increasing
the utilization of equipment we believe it is possible to double the
productivity of our customers’ logistics systems. To improve pro-
ductivity and the use of available resources, we are working with
AI and Machine Learning technologies to optimize transportation
through load consolidation, capacity sharing, and to improve fleet
100%
FOSSIL-FREE
100%
MORE PRODUCTIVE
100%
SAFE
100%
22
VOLVO GROUP 2023
STRATEGY
efficiency. In addition, we are developing autonomous transport
solutions for confined areas such as quarries and mining, as well
as for hub-to-hub transports on highways.
Driving the transition to net-zero
Around the globe, businesses are starting to move towards decar-
bonization with the help of Volvo Group products and services.
Just as the Volvo Group has set ambitious targets on green-
house gas emission reductions that are in line with the Paris
Agreement and approved by the Science Based Targets initiative
(SBTi), many of our customers and their customers are also com-
mitting to their own sustainability goals. This contributes to them
phasing out vehicles and machines running on fossil fuels and
replacing them with electric products. Our range of zero-emission
products and services play an important role in supporting this.
In 2015, there were 116 companies taking action with the SBTi.
In 2022 that number was 4,200 and by the end of 2023 it had
grown to 7,000.
Shift to electric
The shift to electric propulsion systems (both battery and hydrogen
fuel cell-based) is not limited to heavy- and medium-duty trucks
– it also covers construction equipment, buses as well as marine
and industrial power applications. In addition, fossil-free biofuels
can be used in combustion engines to help reduce greenhouse gas
emissions.
Our electric vehicles and machines, based on well-proven
technology within the Volvo Group, are serving in real operations.
The electrified transport and infrastructure solutions are helping
transport operators and customers in the construction sector to
significantly reduce emissions and noise.
Already today, electric trucks and construction machines are
viable options from a total cost of ownership perspective in certain
segments in some markets. This transformation is expected to
continue to develop segment by segment and region by region,
with demand for electric trucks and machines expected to increase.
This is exemplified by the illustration below with the expected
development for trucks.
With improvements in battery and hydrogen fuel cell technol-
ogy and the development of charging networks, the Volvo Group
is convinced that there will be a transformation of most of the
transport and infrastructure industries. However, the pace of elec-
tric transportation adoption will vary from region to region and
depend on the availability of robust charging and hydrogen infra-
structure. To this end, Volvo Group is an active partner in several
battery charging and hydrogen infrastructure projects in both
Europe and North America, with the express aim of increasing
adoption rates and thereby further reducing emissions. Customer
demand will also be dependent on governmental incentives for
investments in green technologies and the price of fossil fuel.
Rollout of sustainable transport and infrastructure solutions
Our introduction of electric trucks, buses and machines has been
ongoing for some time. In fact, it started back in 2015 with our
first hybrid electric bus. We are drawing on the experience from
Taking action with science-based targets
2015 20252022
2023
116
4,200
7,000
Companies taking action with SBTi
on climate change mitigation.
Expected adoption of electric trucks
EV market
Total
Distribution
Waste
Regional
Construction
Long haul
Electrification will happen segment
by segment and region by region.
23
VOLVO GROUP 2023
STRATEGY
The Volvo Group’s path to decarbonization
100%
0%
2030 2040 20502020
Fossil-based energy
Fossil-free energy
Share
of new
vehicles
Fuel cell
BioLNG
HVO, electrofuels, hydrogen etc.
Battery
Electric
Internal
Combustion
Engine
At least
35% electric
vehicles
2030
Volvo Group
net-zero value
chain GHG
emissions
Customers’
rolling fleets
net-zero
Our ambition is to reach
net-zero greenhouse gas
emissions by 2040. This
will enable our customers
to have net-zero rolling
fleets by mid- century as
it takes approximately
ten years to renew a roll-
ing fleet. We have a
three-pronged approach
to the decarbonization of
the product offer and
customers’ fleets of
vehicles and machines:
• Battery-electric
• Fuel cell-electric
• Internal combustion
engines running on
lower carbon fuels
such as green hydro-
gen, bigoas and HVO.
The black vertical arrows
indicate that there is
uncertainty about the
future market share of the
different technologies.
the city bus applications, having built the hybrid-electric solutions
into battery-electric buses.
On the truck side, Volvo Trucks, Renault Trucks and Mack Trucks
started series production of trucks for important segments such
as city distribution, waste and recycling in 2020. The Group con-
tinued its step-by-step rollout with regional haul Volvo trucks in
North America in 2021 and of Volvo trucks for regional haul and
heavy construction in Europe in 2022. Renault Trucks started
series production of its heavy-duty electric trucks in November
2023. The Volvo Group intends to have electric products and
solutions for all relevant truck segments, eventually also the
demanding long-haul segment, which is expected to be a combi-
nation of battery-electric and fuel cell-electric vehicles. In addition,
there will be combustion engines running on renewable fuels, with
green hydrogen being one option.
The first electric compact construction equipment were intro-
duced in select markets in Europe in 2020. The rollout continued
in Europe and North America in 2021, followed by Asia in 2022.
The first medium-duty electric machine, the 23-ton EC230
electric excavator, was brought to selected markets in 2022
and in 2023 more markets in Europe were added. For heavier
construction machines, fuel-cells is also expected to be an alter-
native towards the end of this decade.
Volvo Penta is also fully committed to developing reliable
electric solutions for applications such as fire trucks, forklifts
and terminal tractors.
Both vehicle and machine equipment applications will rely on
the availability of local or onsite electric charging or hydrogen
generation and refueling infrastructure.
Electrification roadmap
2010 2015 2020 2025 2030
Urban transport
& light
construction
Demanding long-haul
Regional haul
Heavy
Large
Medium
Compact
Heavy construction
Fuel cell electric
Battery electric
Energy recuperation
Electric hybrid
24
VOLVO GROUP 2023
STRATEGY
VOLVO GROUP 2023
STRATEGY
VOLVO GROUP 2023
STRATEGY
25
Strong assets a base
for the transformation
In the shift to electric vehicles and machines and autonomous
transport, the Volvo Group has several strong assets such as a
modular platform, a well-invested industrial system and strong
partnerships.
The Volvo Group’s modular vehicle architectures can continue to
serve the Group well. They create flexibility as well as cost and
capital efficiencies in research and development as well as in the
industrial system.
CAST – the Volvo Group’s modular system
The Volvo Group and its partners can benefit from the Group’s
modular platform Common Architecture & Shared Technology
(CAST). The ambition with CAST is the continuous development of
a competitive set of modular products and services that are easy
to integrate, meet future legal, market and societal needs, as well
as meeting customer expectations. The CAST system is modular,
scalable and cost-efficient.
Through well-defined performance steps and continuous reduc-
tion of complexity, the CAST ecosystem supports our different
brand strategies across disruptive technology trends while captur-
ing synergies for the Volvo Group and its joint ventures and alli-
ance partners.
Trucks with different drivelines on the same assembly line
The Volvo Group’s modular vehicle architecture creates advan-
tages in both the development and manufacturing phase. For
example, it allows us to put either an internal combustion engine,
a battery-electric driveline or fuel cell-electric driveline in the same
truck chassis. In this way, we can reduce time and costs in the
development phase and bring new offers to the market faster. In
addition, we can manufacture the different variants on the same
assembly line in existing plants, leveraging our skilled workforce
and invested capital.
Increased depth of engagement in the battery value chain
In 2022, Volvo Group opened its very first battery pack assembly
plant. Located in Ghent, Belgium, the plant supplies ready-to -
install batteries for Volvo Trucks’ full electric heavy-duty trucks.
In the new battery plant, cells and modules from Samsung SDI
are assembled into battery packs that are tailor-made for the Volvo
Group’s products. In 2025, the plant in Ghent will start to also
produce battery modules. The decision to install battery module
Common Architecture & Shared Technology
Construction
equipment
Joint ventures
and alliances
Buses
Trucks
Volvo Penta
CAST
Common
Architecture
Shared
Technology
The Volvo Group’s
modular platform.
Trucks with different drivelines on same line
Combustion
engine
Electric
driveline
Battery
pack
Fuel cell
pack
Fuel cell
electric
Combustion
engine
Pre-assembly stations
Main assembly line
Battery
electric
Driving synergies and reducing cost.
26
VOLVO GROUP 2023
STRATEGY
manufacturing capacity is an important step for the Volvo Group
to shape its future value chain for battery systems.
Another important step is the process to establish a large-scale
production plant for battery cells in Mariestad, Sweden. Construc-
tion of the plant is planned to begin in 2024 with commissioning
towards the end of this decade. The Volvo Group plans to gradually
increase capacity to reach large-scale series production. The battery
cells will be designed specifically for commercial vehicle applications.
In the beginning of 2024, the Volvo Group acquired the battery
business from Proterra in the US, adding new capabilities and
capacity to the Group. Read more on page 52.
Leadership through partnerships
Technologies develop at a faster pace than ever before. Combined
in new ways they offer new and innovative solutions in almost all
industries. Keeping up with the latest development is vital to stay
successful and is hard to do on one’s own, and that is why the
Volvo Group works in collaborations and partnerships. Below are
some examples.
We have a strategic alliance with Isuzu Motors. The alliance aims
to capture opportunities in the ongoing transformation of the com-
mercial vehicle industry. Alliance work includes a technology part-
nership and creating a larger volume base to support investments
for world-class technology.
We also have a strategic alliance with Samsung SDI to develop
batteries for the Volvo Group’s electric products. Working together
with Samsung SDI, Volvo Group aims to accelerate the speed of
development and strengthen the long-term capabilities within
electromobility, to the benefit of customers in different segments
and markets.
Partnerships with other OEMs
The Volvo Group and Daimler Truck have a fuel cell joint venture
called cellcentric, with the intention to develop, produce and
commercialize fuel cell systems for heavy-duty vehicle applica-
tions and other use cases.
Together with Daimler Truck and the Traton Group we have
founded Milence, to install and operate a high- performance public
charging network for battery-electric heavy-duty long-haul trucks
across Europe.
Partnerships for autonomous solutions
We work together with Aurora to develop autonomous solutions
for on-highway transportation. Aurora is a US-based company
specialized on the development of virtual drivers. Volvo Autono-
mous Solutions has also partnered with customers DHL Supply
Chain and UBER Freight regarding on-highway autonomous
solutions and with for instance Holcim to further develop the
use of autonomous electric haulers in quarries.
Fossil-free steel, aluminum and clean energy
The Volvo Group collaborates with SSAB on the research, devel-
opment and commercialization of the world’s first vehicles made
of fossil carbon emission-free steel.
We also have a collaboration with H2 Green Steel for near zero
emission steel. Under the long-term agreement Volvo Group will
purchase near zero emission steel from H2 Green Steel’s new
plant in Boden in Northern Sweden. Start of production is planned
for end of 2025 with deliveries to Volvo Group starting mid-2026.
During the UN Climate Change Conference COP28 held in
Dubai in December 2023, the Volvo Group announced a new
strategic partnership with Norsk Hydro, that includes establishing
a roadmap towards supplying near zero aluminum ahead of 2030
and to enable greater use of low-carbon aluminum in Volvo’s pro-
duction towards supplying net zero aluminum in 2040. The part-
nership will also explore how Volvo Group’s innovative transport
solutions can be used in Norsk Hydro’s mining operations in Brazil
to further reduce the carbon intensity of the aluminum value chain.
Amid increasing demand for clean energy, Volvo Group in 2023
partnered with Vattenfall, the largest producer of renewable elec-
tricity in Sweden. Read more on page 44.
Driving change with public-private partnerships
We are also active in public-private partnerships to drive change.
One such partnership is First Movers Coalition which has been
established with the aim to drive demand for low carbon technolo-
gies. Volvo Group is a founding member of the coalition.
H2Accelerate is a collaboration with the aim to accelerate the
use of hydrogen as a fuel for heavy-duty road transport in Europe.
The group comprises vehicle OEMs Volvo Group, Daimler Truck
and Iveco and hydrogen suppliers Shell, OMV and TotalEnergies.
27
VOLVO GROUP 2023
STRATEGY
Group targets
– fulfilling our ambitions
The Volvo Group has targets for both financial development
and development in the area of sustainability.
Financial targets
The current financial targets were set by the Board of Directors in
2017 and encompass operating margin for the Volvo Group, net
financial position in the Industrial Operations and return on equity
in Financial Services.
A clear and straightforward operating margin target supports
the efforts to drive performance across the Group through the
business cycle. The target also aligns with the way the Group is
challenged and measured internally.
A debt-free industrial balance sheet, excluding pension and lease
liabilities, enables the Volvo Group to better manage cyclicality in a
capital-intensive industry and to secure competitive cost of funds
for the Financial Services’ operation.
OPERATING MARGIN FOR
THE VOLVO GROUP, %
2022 20232019 20212020
0
5
15
10
11.6
12.1
9.7
8.1
11.5
Target: The Volvo Group’s operating margin
shall exceed 10% measured over a business
cycle.
Outcome: In 2023, the operating margin
amounted to 12.1% (9.7). In 2019–2023
the average operating margin was 10.6%.
In 2023, the adjusted operating margin
amounted to 14.0% (10.7). In 2019–2023
the average adjusted operating margin was
10.4%. For more information on adjusted
operating margin, please see Key Ratios
on page 218.
NET FINANCIAL POSITION INDUSTRIAL
OPERATIONS, excl. post- employment
benefits and lease liabilities, SEK bn
2022 20232019 20212020
100
25
0
75
50
66.2
74.7
62.6
73.9
83.4
Target: The Industrial Operations shall under
normal conditions have no net financial
indebtedness excluding provisions for post-
employ ment benefits and lease liabilities.
Outcome: At the end of 2023, the Industrial
Operations had a net financial asset position
of SEK 83.4 billion (73.9).
RETURN ON EQUITY IN
FINANCIAL SERVICES, %
18
9
12
15
6
3
0
2022 20232019 20212020
13.0
18.0
8.3
15.0
–0.3
Target: Financial Services’ target is a return on
equity of 12–15% at an equity ratio above 8%.
Outcome: In 2023, return on equity amounted
to 13.0 (–0.3) at an equity ratio of 8.0%. In
2019–2023 the average return on equity was
10.8%. Excluding Russia and Belarus return
on equity was 13.9% in 2023 and 15.4% in
2022. In 2019–2023 the average return on
equity excluding Russia and Belarus was 14.1%.
For more information on adjustments, please
see Key Ratios on page 218.
28
VOLVO GROUP 2023
STRATEGY
Climate targets
The Volvo Group has committed and set targets in line with the
Science-Based Targets initiative (SBTi) campaign Business Ambi-
tion for 1.5°C, and we have set ambitious milestone targets in our
own operations and value chain along the way. As the most signifi-
cant emissions are in the customers’ use-phase, the Volvo Group
sees significant opportunities in helping to decarbonize their oper-
ations.
The transition towards lower emissions in our industries is at an
early stage but is expected to accelerate with increased electric
vehicle sales and with the support of fuel-efficiency improvements.
The Group’s own operations (Scope 1 and 2) make up less than
1% of total emissions. The use-phase (Scope 3.11) makes up approx-
imately 95% of lifecycle emissions and this is our main focus of
decarbonization. Consequently, we have established targets per
segment.
For Trucks and Buses, the targets are set in emission per vehicle-
kilometer. For Construction Equipment, Volvo Penta and our own
operations, the targets are set as total absolute reductions. These
targets are approved by the SBTi as science based.
Tracking of emissions in remaining scopes, representing approxi-
mately 4% of the total, is under development.
Scope 3
use phase
TRUCKS
Target 2030
–40
%
emissions per
vehicle km
Status 2023
–6%
Scope 3
use phase
BUSES
Target 2030
–40
%
emissions per
vehicle km
Status 2023
–5%
Scope 3
use phase
CONSTRUCTION
EQUIPMENT
Target 2030
–30
%
absolute
emissions
Status 2023
–40%
Scope 3
use phase
VOLVO PENTA
Target 2034
–37.5
%
absolute
emissions
Status 2023
+11%
Scope 1–2
OWN
OPERATIONS
Target 2030
–50
%
absolute
emissions
Status 2023
–23%
On an aggregated level, the total calculated emis-
sions amounted to 266 million tons 2023 com-
pared with 323 million tons in 2019. The result in
total GHG emissions is a combination of energy
efficiency, sales volumes and product mix. For
construction equipment, lower sales volumes
in China compared to baseline is the most
important factor.
The reported emissions for the year in ‘scope
3.11’ use phase make up the vast majority of
the total emissions footprint and is calculated
by including expected lifetime emissions from
all products sold in the reporting year. As such,
annual sales volumes have a significant impact
on results from one year to the next. The Volvo
Group is operating in cyclical industries, which
are linked to economic activity, and conse-
quently sales volumes and utilization of the
rolling fleet of products vary over time. See
detailed information on GHG emissions, mea-
surements and targets on pages 170–171.
GREENHOUSE GAS EMISSIONS
Mton
20202019
2021 2022
2023
241
323
286 287
266
SBTI APPROVED CLIMATE TARGETS, from baseline 2019
29
VOLVO GROUP 2023
STRATEGY
30
VOLVO GROUP 2023
STRATEGY
Volvo EC230 Electric
launched in Europe
In 2022, Volvo Construction Equipment
launched its mid-size EC230 Electric in
Norway. The battery-electric excavator has
since then been successfully deployed at
fossil-free construction sites in markets
such as Sweden and is now commercially
available to selected customers across Europe.
31
VOLVO GROUP 2023
STRATEGY
Sustainability impacts
across the value chain
Our strategy responds to a range of sustainability-related
matters. This means considering the impact on the world
around us as part of how we look at the long-term success
of our business.
Business models depending on use case
Volvo Group is continuously striving to develop business models
suitable for different customers and their specific use cases.
We summarize our key business models in three variants.
1. We offer uptime and performance with vehicles and machines
that our customers take full ownership of. Here we add value
with premium products and services as well as financing solutions.
2. We offer customers the opportunity to increase capacity through
business models based on usership, where we bundle products
and services. Examples are rental services, operating leases and
equipment as a service.
3. We offer customers productivity-based solutions where we
design turnkey solutions and where we operate sites or routes
for certain segments. This can include infrastructure establish-
ment such as charging, battery monitoring and automation.
In terms of volumes and net sales, the majority of our business
is within the first type of business model, where the ownership is
transferred to the customer.
In the transition towards net zero greenhouse gas emissions,
we see opportunities to move more into business models based
on usership and end-to-end productivity solutions.
In this shift we see opportunities to generate more value for
our customers. The shift is also a clear growth opportunity for the
Volvo Group, based on the higher sales values of electric vehicles
and machines, autonomous solutions, new digital services and
services connected to energy solutions.
CUSTOMERS SUPPLY
NETWORK
DEVELOPMENT OF
PRODUCTS AND SERVICES
RETAIL, SERVICE, MAINTENANCE
AND REPAIR
PRODUCTION AND
LOGISTICS
32
OUR BUSINESS
VOLVO GROUP 2023
Our customers
The Volvo Group’s business areas support customers in the main
segments of trucks, buses, construction equipment, marine drive
systems and industrial engines. Customers and end users are
active in many industries. Direct customers are found in the key
industries of road freight transportation, public transportation,
construction and infrastructure development sectors.
Our aim is to support our customers by providing offers that
increase their productivity, provide safe operations, secure uptime
and increase fuel efficiency and thus reduces GHG and exhaust
emissions, since the use-phase makes up approximately 95% of
CO
2
emissions.
Sustainable business focus areas
• Customer and end-user safety page 184
• Climate
page 166
Development of products and services
Fulfilling our customers’ needs and improving their safety, profit-
ability and environmental performance forms the basis of our
product and service development. Product development is also
influenced by legislation, changes in society and new technolo-
gies. There are strong trends such as automation, electromobility
and connectivity that we are investing in that need to be balanced
with investments in the development of current technologies.
We provide a range of products and services to customers on
almost 190 markets. The Group’s product offering includes new
trucks, buses, machines and engines as well as sales of used trucks,
buses, machines, trailers, superstructures and special vehicles.
Services include sale of spare parts, maintenance services, repairs,
extended coverage, connectivity solutions and other aftermarket
products. Services also includes sales in Financial Services related
to finance leases, operating leases and insurance.
Sustainable business focus areas
• R&D related to zero- and low-emission vehicles
page 169
Supply network
The Volvo Group depends on global and regional supply chains
to deliver components, parts and complete services and systems.
Approximately 12,000 suppliers support the Volvo Group’s serial
production and in total the Group’s supply network is made up of
more than 50,000 suppliers globally. When developing a robust
supplier base, we look at a wide range of impacts, opportunities
and risks. Our Supply Partner Code of Conduct sets the founda-
tion for how we work.
Our supply partners have an important role in helping to develop
the solutions needed for our net-zero ambition as well as to reduce
supply chain emissions. Our latest inventory shows that GHG
emissions from the supply chain make up approximately 4% of the
total product life-cycle emissions. Focus areas for emission reduc-
tion activities have been identified in aluminum, steel, plastics,
batteries and electronics.
Sustainable business focus areas
• Responsible purchasing and social impact page 189
• Supplier environmental assessments
page 173
• Sustainable minerals program
page 190
Production and logistics
Our global industrial and logistics system strives for continuous
improvement to deliver on customer expectations and meet inter-
nal targets. The industrial system consists of capital-intensive
component factories as well as labor intensive assembly plants.
The component factories supply the Group’s needs on a global
basis, whereas assembly plants, in most cases, are located close
to end-markets to cater for local needs and specifications, and
short delivery times.
The manufacturing operations depend on suppliers that sub-
assemble parts and systems. The Volvo Group utilizes truck
assembly partners and bus body builders to carry out certain
assembly processes for the final product.
Sustainable business focus areas
• Employees and workforce
page 179
• Health and safety
page 182
Retail, service, maintenance and repair
Our global network of dealers and service centers staffed by
competent and service-oriented personnel are key factors for
customer satisfaction and success. The business areas within
the Volvo Group support customers via efficient dealer workshops,
and through service and maintenance agreements.
We offer different levels of service contracts to optimize and
extend product life, which can lead to both resource efficiency
and business opportunities. Durable products in combination with
added services can enable good opportunities to extend product
usefulness and sell used or repurposed vehicles and parts.
Sustainable business focus areas
• Responsible sales
page 188
• Resource use
page 173
33
VOLVO GROUP 2023
OUR BUSINESS
Driving prosperity for
many stakeholders
By delivering customer value, we also create value
for ourselves, our employees, our owners, other
stakeholders and for society as a whole.
We believe that the key to being successful is to create value for
our customers by contributing to improving their profitability.
By understanding our customers’ priorities and challenges, we
are able to provide products and services that grow customers’
revenues and decrease their costs.
Key areas to create value for our customers are offers that
increase our customers’ productivity, secure uptime and increase
fuel efficiency.
INSIGHTS FOR ADDITIONAL
VALUE CREATION
TRANSPORT AND
INFRASTRUCTURE
SOLUTIONS
Value for
customers
Value for
Volvo Group
Value creation
• Productivity
• Asset uptime
• Energy efficiency
• Increased revenue
• Decreased costs
Sustainable
profitability growth
• Excellent products
and services
• Closeness to
customers
• Efficient way of
operating
• Increased revenue
• Decreased costs
Sustainable
profitability growth
For customers
For our customers, uptime is everything. Regardless of if it is a cus-
tomer that owns one single truck or a fleet of trucks, if they are a public
transport provider or a coach owner, a construction entrepreneur or a
quarry owner; their performance depends on reliable products and ser-
vices that meet the needs of their business. Around 2,1 million trucks
and 80,000 buses, which the Group manufactured in the last ten
years, perform transport work worldwide. Construction equipment
operate at sites all around the world, and we have delivered more
than 700,000 machines the last ten years.
34
VOLVO GROUP 2023
OUR BUSINESS
For employees
The Group’s 104,000 employees are our
most important asset. Employee engage-
ment and a performance culture based on
customer success, trust and passion are critical for the Group to
fulfill its mission. The Group strives to offer competitive employ-
ment terms and benefits as well as a stimulating, safe and healthy
work environment. In 2023, we paid SEK 57,020 M in salaries and
remuneration.
57.0
(SEK bn)
For suppliers
A solid supplier base and professional part-
nerships are essential for the Volvo Group.
The Group provides both income and
employment for a large number of companies and in many societies
around the world. Purchased goods and services is the Volvo Group’s
single largest expense and in 2023 we bought goods and services
for SEK 374,526 M.
374.5
(SEK bn)
For shareholders
The Volvo Group strives to generate value
for its shareholders through a positive
share price development and payout of
dividends. From 2018 to 2023 the price for the Volvo B share rose
by 126%. Shareholders normally receive a certain portion of the
retained earnings in the form of a dividend, after consideration has
been given to the Group’s need for capital for continued develop-
ment according to its strategies. In 2023, shareholders received
dividends totaling SEK 28,468 M. To the 2024 AGM, the Board of
Directors proposes an ordinary dividend of SEK 7.50 per share and
an extra dividend of SEK 10.50 per share, in total SEK 36,602 M.
36.6
(SEK bn)
For society
Our products and services make societies
function. Our customers operate bus lines
so that people can get to work, they trans-
port food and industrial goods and they build infrastructure such as
roads and hospitals. Furthermore, road transport directly creates
millions of jobs around the world. We also contribute to the local
economy by being a major employer in many communities, providing
both direct and indirect employment. In 2023, the Group paid SEK
12,891 M in social costs, SEK 5,423 M in pension costs and SEK
20,807 M in income taxes, in total SEK 39,121 M. We also pay cus-
toms duties as well as property and energy taxes.
39.1
(SEK bn)
For creditors
A long-term competitive business requires
access to capital to be able to invest. The
Volvo Group strives to ensure that the capi-
tal is used in the best possible way and to assure debt providers with
the financial strength to secure proceeds and repayment. In 2023,
the Volvo Group paid its creditors SEK 1,158 M in interest.
1.2
(SEK bn)
For the Volvo Group
A significant portion of generated capital
is normally transferred back into the busi-
ness. The capital is used for investments
that will strengthen competitiveness and create long-term value for
the Group and its stakeholders. In 2023, the Volvo Group invested
SEK 26,645 M in R&D and another SEK 13,120 M in property, plant
and equipment, in total SEK 39,765 M.
39.8
(SEK bn)
35
VOLVO GROUP 2023
OUR BUSINESS
Volvo Group colleagues
driving the transformation
For Volvo Group, creating a safe, inclusive, and engaging work environment
for its employees is an essential focus area. Digitalization, electromobility, and
automation have a significant impact on our business and ways of working,
and in this shift our people are the most valuable asset.
Our care for people comes to life in how we encourage lifelong
learning, promote upskilling and reskilling, grow talent, invest in
people and create a culture where everyone can contribute. This
approach will help Volvo Group realize its People Commitment –
to create safe workplaces, to use the full potential of our diversity
and to drive engagement, so that our employees recommend
Volvo Group as a great place to work.
Employee Safety
Volvo Group never compromises on workplace safety in its opera-
tions and works towards a zero-accident rate with proven meth-
ods that strive to avoid any conditions that put employees at risk.
In addition to seeking to reduce the most frequent accidents,
which are usually also the minor ones, Volvo Group is increasing
its focus on preventing serious injuries and fatalities. All our opera-
tions are governed by safety standards and everyone in our organi-
zation has both the right and the responsibility to raise issues to
improve workplace safety – until we reach a zero-accident rate,
there is always more to be done to improve.
Work life balance and mental health
Volvo Group is made up of a palette of unique individuals, each
with their own interests and motivations. Everyone’s work life bal-
ance equation is different. That is why we believe that in addition
to Group programs, good communication and a trusting relation-
ship between employee and manager is the foundation for a
healthy work life balance that accommodates individual needs.
Improved mental health at work leads to higher performance, trust
between individuals and within teams, and high engagement. In
Volvo Group, we believe that healthy workplaces have clear roles
and expectations, enough time to carry out tasks, appropriate
work environments, and support. Volvo Group offers a wide range
of measures to identify warning signs and prevent factors leading
to excessive stress - from apps and training videos to face-to-face
sessions with psychologists and occupational therapists.
Opportunities for personal and professional development
Volvo Group values the desire of its employees to grow and take
on new responsibilities – our people will help shape tomorrow’s
society. Here, employees are part of a global lifelong learning cul-
ture that can unlock the full potential of everyone. It allows people
to learn faster than the world around is changing, so that we can
be ready to upskill, reskill and seize the opportunities around us.
In Volvo Group, career development is backed up by regular dia-
logues on performance and growth, designed to help employees
excel and make sure that their aspirations and personal goals
are met. The company offers structured career paths and training
programs for many different roles, such as people leaders, project
managers, engineers, and specialists. While employees are in the
driver’s seat of their own careers, Volvo Group supports their
ambitions through state-of-the-art training.
Volvo Group University is the central function of the Group’s
learning ecosystem. It develops, designs and provides training and
learning experiences well rooted in both todays and future busi-
ness needs. Our corporate university is an expert on adult learning
and makes sure employees get quality assured training. Every year
Volvo Group allocates approximately half a million training days to
our employees and retail organizations worldwide. And not only
that – Volvo career opportunities also include shadowing, reverse
mentoring, individual coaching, and networking.
Diversity and inclusion
Volvo Group draws strength from its diversity. To continuously
improve inclusion and reflect the diverse world we operate in, the
Group provides leaders and employees with the chance to master
inclusive skills and works to combat unconscious bias impacts.
We work to create equitable leadership development opportuni-
ties and strive for at least 35% of each gender in all our teams.
We have an amazing opportunity to draw ideas and viewpoints
from more generations than was ever possible before in the work-
place. Today, five generations work side by side in Volvo Group.
We also have a long history of including unique and diverse abili-
ties in our operations, especially in key markets, and we are work-
ing to increase focus in this area globally.
We channel our passion for inclusion into our employee networks.
These resource groups give a voice to key diversity threads and
engage the majority as allies to build a more inclusive Volvo Group.
We have networks across the globe supporting: Women and Gen-
der balance, Generational, LGBTQ+, and Multicultural inclusion
as well as Diverse Abilities. Our networks interact with leaders
and employees to deepen understanding of these key topics.
36
VOLVO GROUP 2023
OUR BUSINESS
Ghent | Innovative approaches
for upskilling and reskilling
The training center at the plant in Ghent, Belgium is a showcase of
how Volvo Group prepares its workforce for the future truck industry.
With a holistic approach to upskilling and reskilling, the organization
has explored new ways to develop talents and build a growth mindset.
A competence map that identifies new competence needs and
assesses the current competence level serves as a strong foundation.
In addition, shifting from a yearly to a quarterly learning and develop-
ment cycle has allowed the organization to better adapt to the fast-
changing environment. This has not only increased the awareness and
involvement of the managers in the learning process, but also helped
strengthen the learning culture.
The training center has implemented several innovative methods
and tools to upskill and reskill its employees, such as:
• Gamification and Lego exercises to teach topics such as safety,
standardized work and Volvo Performance System (VPS) in a
more engaging and effective way.
• The “truck in a box”, which is a display that contains the complete
electrical circuit of a truck with cables, buttons, and lights for both
the chassis and the entire cab. This tool provides a visual overview
of how everything works and gives the opportunity to simulate and
test fault codes etc.
• Mixing theoretical training with practical exercises in a lifelike envi-
ronment. In the Battery pack training (BP1), participants practice
how to assemble parts on a training battery pack with their safety
protection on.
• Exploring future technology, by allowing engineers, trainers and first
line managers to take part in university courses to learn more about
hydrogen and fuel cell technology.
The training center in Ghent has also developed a tailor-made initia-
tive to reskill employees for a technical profile. This didactic setup with
tools and equipment in a suitcase, combined with online training and
exercises helps employees explore and learn how to e.g. connect elec-
trical circuits correctly.
“One of the best things with the didactic set-up of the training suit-
case is that it allows our employees to explore a technical talent they
didn’t know they had. Thanks to the blended approach with a combina-
tion of digital and hands-on training, they can learn independent of
time and place and work at their own pace. Just by doing some simple
exercises, they develop their interest and their skills and start to think
– wow, I can do that, ” says Nico Van Den Broeke, group leader at the
training and competence center in Ghent.
Five reasons to join Volvo Group
according to our people
We like to believe that it is the combination of
an inspiring purpose, innovation leadership, a
strong culture with growth opportunities and
fair compensation that is the reason why peo-
ple want to work and do business with us. We
asked our employees why they wanted to join
us. These are the top five reasons.
1
Be cared for and listened to
2
Design your own career
3
Get rewarded for your contribution
4
Work with the latest technologies
5
Leave society in good shape for the
next generation
Read more here
37
VOLVO GROUP 2023
OUR BUSINESS