Volvo Car Corporation 2011. Great achievements and more to come.

5 January 2012

• Total sales reached 449,255 cars, an increase of 20.3 per cent over 2010
• SPA - Scalable Product Architecture announced as new technology base
• Designed Around You - a new human centric corporate and brand strategy
• Electrification strategy taken one step further with Siemens partnership
• New organisation and Executive Management Team
• China growth plan in progress

Volvo Car Corporation had an eventful 2011 with growth in all sales regions. The company is now the fastest growing luxury car manufacturer and on the right track towards sustainable growth and profitability. The growth plan for the Chinese market is vital to the year 2020 global sales target of 800,000 sales and the expansion in China is progressing with the establishment of new facilities including local manufacturing.

With its new ownership, Volvo Car Corporation has revealed that major investments will be made in new products and the industrial system in the coming years. This intensive phase of investments within Research and Development will lay the foundation for the company's long term competitiveness. The basis for all future Volvo cars has been defined with the announcement of a Scalable Product Architecture. Together with a new engine and electrification strategy, this will provide technologies that will make Volvo Car Corporation's products leaders in in fuel efficiency.

A new global corporate and brand strategy - "Designed Around You" - is an important part of Volvo Car Corporation's global revitalisation plan. The strategy points out the direction of Volvo's future brand development, and the key word is human. It summarizes the brand's approach to understanding people, providing a more uncomplicated luxury experience while at the same time linking the brand to the heritage of building safe and dependable cars.

CORPORATE UPDATE

Sales +20.3 per cent
Retail sales in 2011 increased by 20.3 per cent to 449,255 units over full year 2010, an improvement of 75,730 units making Volvo Car Corporation the fastest growing luxury car manufacturer. Significant growth was recorded in all sales regions, with China demonstrating the largest increase with 54.4 per cent over 2010. North America grew by 22.5 per cent, the Nordic region by 13.3 per cent, Europe improved by 13.1 per cent and the Overseas region grew by 35.7 per cent compared to 2010. Market shares improved in all regions compared to prior year.

Improved sales are mainly driven by strong demand for the 60-series; the Volvo S60 and V60 together with the XC60 crossover. Sales of the low-CO2 DRIVe models continue to drive sales in Europe and the XC-range continues to perform well, now representing around 36 per cent of total sales.

Profitable first three quarters and positive outlook for 2011 full year
Volvo Car Corporation has gradually returned to sustainable profitability and the company delivered a profit of 477 MSEK in the first nine months of 2011 and expects to show positive figures for the full year of 2011. Compared to 2010, the result has been improved primarily by higher sales volumes and improved mix of vehicles. These factors were partially offset by increased costs due to investments in new technologies to support expansion plans. The result was also affected by negative development of exchange rates.

China growth plan is on track
Since late 2010, Volvo Cars China has grown from a national sales company into a full-fledged organisation including sales and marketing, manufacturing, purchasing, product development and all other supporting functions, headquartered in Shanghai. The sales network in China is expanding systematically and the Chengdu plant construction has been kicked off with investigations ongoing for a potential second plant as well as an engine plant. The company's aim is to reach a sales volume of about 200,000 cars in the Chinese market by 2015.

Organisational changes
As a stand-alone company and with a new corporate strategy it has been essential to realign parts of the organisation in order to properly support Volvo Car Corporation's ambitious growth strategy. Several new globally experienced members have been recruited to the Executive Management Team to secure the execution of the new business plan and profitable growth. Marketing, Sales and Customer Service has undergone important restructuring. At Research & Development major recruiting of engineers was initiatied - Volvo Car Corporation's aggressive product plan for the future has created a need to recruit up to 1,200 people, mainly engineers in Gothenburg. A large part of the additional workforce was in place by the end of 2011.

Also in manufacturing there is a need to expand to manage the increased volumes which were implemented during the year. The manufacturing plant in Ghent, Belgium, reached a new record level in production volumes. At the Torslanda plant in Gothenburg, Sweden the line speed has been increased to meet the growing demand.

PRODUCT DEVELOPMENT FOR ENVIRONMENTAL LEADERSHIP
Efficiency and electrification are key drivers when Volvo Car Corporation takes the lead in the quest for green motoring and superior fuel economy. The companys' dedicated environmental focus has put Volvo Car Corporation in the lead among European carmakers in reducing carbon dioxide emissions, having outperformed Europe's eight largest car manufacturers in 2010 by cutting overall CO2 emissions with no less than 9 per cent.

SPA - Scalable Product Architecture: New vehicle technologies
Volvo Car Corporation's technological future is based on a Scalable Product Architecture (SPA) which in principle means that most Volvo models can be built on the same production line irrespective of vehicle size and complexity. When the first model built on SPA is launched in 2014 - the new XC90 - about 90 per cent of its components will be new and unique. In addition to the industrial benefits of common vehicle architecture there are also significant product related advantages in terms of weight, electrification, driving dynamics and design proportions.

VEA - Volvo Environmental Architecture: New four-cylinder strategy
The new engine range, known as VEA - Volvo Environmental Architecture - consists solely of four-cylinder engines which in certain configurations will benefit from enhanced performance through electrification or other spearhead technology. Volvo Car Corporation will develop four-cylinder engines with higher performance than today's six-cylinder units, along with lower fuel consumption than the current generation of four-cylinder engines.

Volvo Car Corporation also introduces a new 8-speed automatic gearbox, which gives the driver a refined drive and excellent fuel economy. Volvo Car Corporation has also begun testing flywheel drive on public roads. Flywheel drive, also known as Flywheel KERS - Kinetic Energy Recovery System - offers the driver additional horsepower, giving a four-cylinder engine the acceleration of a six as well as significant fuel consumption savings.

SMART ELECTRIFICATION
Electrified cars must be as safe as any other new Volvo car - when it comes to owning and driving and also in the event of an accident. Volvo Car Corporation has conducted wide-ranging and thorough analysis of a variety of safety scenarios for electric powered cars. Through advanced automatic monitoring of battery status and by encapsulating the battery and protecting it effectively in a collision, the result is a world-class safety level.

Volvo V60 Plug-in Hybrid - a world first
The Volvo V60 Plug-in Hybrid is the world's first diesel-powered plug-in hybrid, giving owners an electric range of 30 miles (50 km) and over 120 miles per U.S. gallon (1.9 l/100 km) in hybrid mode. It integrates the best properties from three different car types into an attractive sports wagon - by simply pressing a button you can choose which car you want to drive: An electric car with a range of up to 50 kilometres, a high-efficiency hybrid with carbon dioxide emissions averaging just 49 g/km, or a muscular fun-to-drive car with a combined output of 215+70 horsepower, 440+200 Nm of torque and acceleration from 0 to 100 km/h of just 6.9 seconds. The V60 Plug-in Hybrid reaches the first European customers in autumn 2012.

Volvo C30 Electric - pure electric drive
Volvo Car Corporation started the production of the Volvo C30 Electric in 2011 as a part of the company's highly ambitious electrification strategy for the forthcoming years. The fleet of 250 cars is leased to customers in selected European countries and they are also currently operating in demonstration programmes in Sweden, Belgium and China. The Volvo C30 Electric has a 20 kWh battery that is recharged from a regular household power socket. A full recharge takes about 7 hours and the operating range is up to 150 kilometres per full charge.

Volvo Car Corporation and Siemens launch electric mobility partnership
A strategic cooperation has been announced between Volvo Car Corporation and Siemens to jointly advance the technical development of electric cars. The focus is on the joint development of electrical drive technology, power electronics and charging technology as well as the integration of those systems into Volvo C30 Electric vehicles.

NEW PRODUCTS
Volvo customers can now choose between a total of seven models with CO2 emissions below 120 g/km, three of them below the 100 g/km mark. The latest additions are the Volvo S60 and V60 in DRIVe versions with CO2 emissions of just 114 g/km and 119 g/km respectively - corresponding to fuel consumption of 4.3 and 4.5 l/100 km respectively. The upgraded engine is already found in the DRIVe versions of the Volvo C30, S40 and V50, all with CO2 emissions of 99 g/km. The Volvo S80, V70 and XC70 have been upgraded with features including the latest user-friendly Volvo Sensus infotainment system and refined drivelines. The active safety system Pedestrian Detection with Full Auto Brake is now also available in these models and City Safety is standard in all three models.

The Volvo XC90 SUV has been updated with more sophisticated lines and materials and the Volvo C70 convertible comes in a limited Inscription version with unique features. In the D5 engine Volvo Cars' engine experts have boosted performance and torque from 205 hp/420 Nm to 215 hp and 440 Nm while at the same time reducing fuel consumption by eight per cent. This means that the fuel consumption of the Volvo S80 D5 with manual gearbox and start/stop is now just 4.9 l/100 km (EU Combined), corresponding to 129 g of CO2 per kilometre.

Start/stop technology has been introduced with automatic gearbox, cutting CO2 emission with 10 g/km or 0.4 litres less fuel consumption per 100 km. The Volvo S60 R-Design offers an even sportier, more dynamic drive with sharpened steering and refined chassis. The latest connectivity news from Volvo Car Corporation is a Mobile application that connects the driver with his/her car via a smartphone so that the driver can stay in touch with the parked car.

CONCEPT CARS
At the Shanghai Auto Show in April 2011, Volvo Car Corporation visualised a masterpiece of Scandinavian Design for car buyers with exquisite tastes – the Concept Universe – a large, luxurious sedan with a new human-centric design language. It is exceptionally refined, yet with all the simplistic assets that puts the individual in the centre of attention. The Concept You, unveiled at the Frankfurt Motor Show in September 2011, picked up where the Concept Universe left off. It combines a sleek coupe-like exterior with a luxurious high-tech interior that keeps the driver in command via intuitive smart pad technology. With a full interior, Concept You lets luxury sedan customers experience the craftsmanship and intuitive technology that will be the hallmark of future Volvos.

OTHER NEWS

Safety innovations
Volvo Car Corporation's leadership in car safety was confirmed in the Insurance Institute for Highway Safety's (IIHS) 2012 Top Safety Pick award where no less than five Volvo models - the C30, S60, S80, XC60 and XC90 -earned a Top Safety Pick. The Safety Center within Volvo Car Corporation is developing an animal detection system which alerts and automatically breaks for animals on the road, based on technologies from the Pedestrian Detection with Full Auto Brake. Another exciting venture is vehicle platooning, as envisaged by the SARTRE (Safe Road Trains for the Environment) project; a convoy of vehicles where a professional driver in a lead vehicle drives a line of other vehicles. Platooning is designed to improve road safety and fuel consumption and thus CO2 emissions.

Quality Award
The quality demands of Volvo Car Corporation was confirmed in the latest J.D. Power study for the German market where Volvo Car Corporation comes first in the brand ranking for 2011 – ahead of all the German premium brands and all the Japanese manufacturers. This result is proof of the high level of quality, dependability and service offered to Volvo car customers and particularly satisfying since premium car customers are especially demanding.

Volvo Ocean Race
The 2011-2012 edition of the Volvo Ocean Race took off from Alicante, Spain on November 5th with six competing teams heading for the first of eight stopovers on the 39,000 nautical mile race around the world. Volvo Car Corporation is together with AB Volvo the joint owners of the race which delivers great media exposure and brand awareness. The next race has already been announced, due to start in 2014. Tradition continues also when Volvo Cars' Special Vehicles Division launches a specially designed model range with a sail racing theme – the new Volvo Ocean Race edition. Four Volvo Ocean Race Edition models - the Volvo V60, XC60, V70 and XC70 – are on offer.

2011 Figures

Sales by model						Ten biggest markets
		2011		2010				2011		2010
S40		23 621		31 688		US		67 273		53 952
S60		68 330		14 786		Sweden		58 463		52 894
S80		14 681		19 162		China		47 140		30 522
S80L		10 018		11 778		Germany		33 167		25 207
V50		45 970		56 098		UK		32 770		37 940
V60		49 820		4 609		Belgium		20 320		17 644
V70		36 842		48 877		Russia		19 209		10 650
XC60		97 183		80 723		Italy		18 705		17 509
XC70		26 156		22 068		Netherlands		15 981		14 308
XC90		39 631		37 597		France		15 678		12 211
C30		27 090		35 981
C70		9 913		10 158
Total		449 255		373 525

2012 Outlook

Volvo Car Corporation has a number of events and challenges ahead. The financial crisis is far from resolved with some uncertainty in consumer confidence and car demand as a result. In the short to mid term Volvo Car Corporation's financial result will be impacted by continued investments in product development, industrial build up in China and marketing to support the new product launches and the new brand direction.

2012 will contain a number of important product launches. The all-new Volvo V40 is a premium 5-door car in the C-segment which will be a tough challenge to its competitors. The Volvo V60 Plug-in Hybrid – the world's first diesel plug-in hybrid – will reach customers in the autumn of 2012. Further, the Volvo XC60 Plug-in Hybrid Concept car will be on display at the Detroit Auto Show in January. All in all, 2012 will be a year of continued growth which will further strengthen Volvo Car Corporation's position in the premium automotive industry.

---