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Executives

Olof Persson – President and Chief Executive Officer

Joachim Rosenberg – Executive Vice President-Group Trucks Sales & Marketing and JVs APAC

Analysts

Frederic Stahl – UBS

Andreas Brock – Nordea Bank AB

Laura I. Lembke – Morgan Stanley & Co.

AB Volvo (OTCPK:VOLVY) Acquisition of 45% of a new subsidiary of Dongfeng Commercial Vehicles Conference Call January 26, 2013 5:00 AM ET

Operator

Thank you for standing by and welcome to the Volvo’s Strategic Alliance with Dongfeng Motor Group. At this time, all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. (Operator Instructions) I must advice you, the conference is being recorded today, Saturday 26, January 2013.

I would now like to hand the conference over to your speaker today, Olof Persson. Please go ahead, sir.

Olof Persson

Thank you very much operator, and most welcome to everyone, listening in today’s telephone conference where we will explain and discuss and present to you today’s news that Volvo Group acquires 45% of Dongfeng Commercial Vehicle. With me today, I have Joachim Rosenberg, our Executive Vice President for Volvo Group Trucks Sales & Marketing and JV base in Asia-Pacific. And the presentation is also available on the web.

So if you would then follow me into page number two, where we conclude that this deal would make the Volvo Group to be world’s largest heavy-duty truck manufacturer in the world, with a combined 2011 volume of some 326,000 heavy-duty and 98,000 medium-duty trucks.

We also see the structure that we have signed agreements and where we will then together with Dongfeng Motor Group create a new subsidiary called Dongfeng Commercial Vehicles, DFCV, and this company will then include the major part of Dongfeng’s medium and heavy commercial vehicle business. This transaction is subject to approval of relevant Chinese authorities and anti-trust agencies and I will come back a little bit later on the timing of this transaction.

But of course, this is for us a very, very exciting day. This is something that from a strategic point of view is very important for the Volvo Group and we are really pleased that we are able to announce this agreement as per today. And I will come back, a little bit more about (inaudible) some segment figures and everything around it, and we will then end with a Q&A session.

I can also report that we had a very good day here in Beijing, where we have then announced this for together with our partner, through Chinese and international media and there was a lot of interest around it and good to discuss some questions on communication.

If you now would follow me into page number three, you can see and for those of you who follow us when it comes to our Group Truck’s strategic objectives, you can see that this agreement supports very much what we are trying to do in terms of the, capture profitable growth opportunity.

By optimizing the brand assets, we’ve become number one or two in combined Group Trucks heavy duty market share, but also which is more important, establish required commercial presence to support revenue growth by 50% in the Asia-Pacific region, and, finally making sure that we do have a production footprint and supply chain in the region as well. So, all-in-all, this agreement fits very, very well into the Group Trucks strategic objectives number three.

If you then would follow me into page number four, we have a different slide description and in the backups you will have a more detail description about the structures between the different units. But if we take it from an overall point of view, you can see that we are then creating the DFCV company, which then contains the majority part of present Dongfeng Motor Group’s heavy and medium duty commercial vehicle business that will take us in to the new company.

As many of you know, we also have since many years a joint venture with the Dongfeng Motor Group called DMG. This joint venture will also be a part of the DFCV structure and all in a shape, as you can see will be 55% for the Dongfeng side and 45% for the Volvo Group and for that we are going to pay RMB5.6 billion which is in the range between 5.8 billion and around that number Swedish Krona.

Then moving on to page number five, we have put together for you a pro forma numbers. As you understand this company, DFCV is not operational, but we have collected the numbers relevant for the company as it would have been existing today, and there you can see the numbers both in 2011 and 2012, where we look at the total production and volume of 191,000 almost 200,000 in 2011, and 148,000 then in 2012, given that the Chinese market has been slower this year than the year before.

Good – and I would come back to it again a little bit later, good market shares. As you know, the Chinese market is by far the largest truck market in the world. It is actually the size of Europe and North America combined. And 16% market share both in heavy and medium duty trucks is of course a very good platform in terms of size.

But as such, you can see, we’re talking about an operation that would have a turnover in 2011 of almost RMB40 billion and in order to calculate that range in SEK, you can see it’s 1.05 per RMB, so it’s almost equal to this British kroner. And here today Q3, we are looking at the RMB22 billion net sales. The operation has 28,000 employee, so it’s a sizable company by sales. It’s actually buying 45%.

If you now would follow into page number 6, there you can see the comparison between the pro forma gain – the DFCV brand market shares as we have discussed before compared to our competitors and you can see there, very easily that this new company will be a one of the leading companies in both the heavy-duty truck market and but also in the medium-duty truck market with, as I said before 16% versus 17% market share. And then you can see the competitors lining up in the different sizes, as percentage on the slide.

Then if we take page number 7, there is a clarification done and it’s very important also to recognize that, what we now are developing and the Company’s content in terms of product, we will be a modern product line up. It’s newly launched models and products that we are putting into this company and the old product portfolio is done as you can see on the right hand side, lined to the different markets and segments, as we do have and it’s covering now both the heavy and the medium-duty.

If you look at the company brands, you have the name, Dongfeng and you can see the logo types or the letters that it’s written. And then the logo is the logo of the double swallow, which you can see there, the red one. So that is the name of the company brand and also the logo type of it. And to the right you can see then the different products that we have. And again I would like to stress that, it’s a newly launched and operated product portfolio that the company would have.

Page number eight, which is a very important part of our strategic target, but also force in order to reach coverage in a market like China, and here you can see on the right hand side, the map both looking at the sales network and the sales service networks. And as you can see, it’s a very, very good coverage throughout China, then of course focusing on to the highly density and populated areas, but you can also see that we are covering the whole of the country. And we do that with 350 dealers and almost 500 service stations. And this is a very important part, then also looking forward in terms of how we can benefit as a company and also looking at how we can develop other brands in China, like the Volvo brand or UD brand or Renault brand.

We will then go to number nine, this is where this company is located, the main industrial site or house is Shiyan, in the Hubei province, and there you can see that, basically it’s a full-fledged production site, with everything from the cab plants, the frames, assembly but also engines and foundries and the new heavy-duty truck plant, which is only a few years old, and very well invested modern production setup. the company had been investing over the last years in modern production setups particular in Shiyan. But you can also see then, that is not only an industry, there we also have activities done around in the southern part and in other pitches in the Hubei province. So this is a company which is, you can definitely say as a hometown in Shiyan, but also a Hubei province company.

Page number 10 gives you the acquisition summary. So it is a global strategic alliance between the Volvo and the Dongfeng Motor Group Co Ltd, the DFG, that’s where you have the transaction. And then you have the DFCV, which then is a company. As of now, the purchase price is RMB5.6 billion, around 5.8 billion Swedish. and in terms of the timeline, we expect the transaction to be finalized within approximately 12 months.

We have to go through the authorities throughout in China and elsewhere and we would follow that very closely of course. And we also have a governance process setup and a governance structure, where we then have a top management team consisting of eight people and it’s a 50/50 nomination procedure, four nominated by Volvo and four by DFG. And it’s correctly, we do have together a joint foundation for this developed company now towards a major global commercial vehicle company, and that is the ambition going forward here. And of course, also strengthen and expand in china.

On page 11, you will see the main benefits for the Volvo Group, that are mainly I would say, but here we chose to show the main one. Of course if you look at our global foot print as we have today, it has been a little bit of a wide spoken in China. With this agreement that we have we definitely take care of that wide spoken, and we get a major foothold and share in the world’s largest truck market, and of course that is beyond the other major shareholding in China’s leading manufacturer.

We will see benefits definitely from cooperation in transmissions, engines, components and future technology, and one thing that is very important is that we add now of course a high volume activity which is very good when it comes to sharing development cost but also making sure that we have a good project and power and local sourcing, when it comes to not probably the DFCV activities, but also for a whole of the Volvo Group. So those are some example of benefits for the Volvo Group.

Moving to page 12, in order to get the good joint venture up in running and working that has to be a win-win situation and if we look some of the main benefits for the DFCV company, it’s unclear a joint ambition of parties to develop the Dongfeng – the Dongfeng brand towards a major brand in the global commercial vehicle industry. DFCV gains, and through Volvo’s worldwide presence, DFCV will gain access to a much broader and much more bonafide export possibilities than they have today.

We also have and done for many, many years, very high expectation in the aftermarket sales, which will be a benefit for DFCV and aftermarket business in China is completed different than the rest of the world. And that again and that the mirror picture I would say compared on the transmission side and in components of future technology, as it is the benefit for Volvo, this is really a win-win because it’s also a main benefit for the DFCV.

Moving on to page 13, we have done and we are looking at well underway to jointly develop business plan for DFCV and you can see the different aspects that we’ve been looking at in order to during the approval time and our next quarters, prepares as much as possible for when we get the approval that becomes both with our fleets running, going forward rather quickly. And you can see that it’s covering this business plan, will cover basically everything from product plan, technical cooperation, sales and marketing strategy, export opportunities and all of that.

To me, this is very, very important to make sure that you have a good future success that is that you are aligning yourself together with the partner in a well-defined business plan and the strategies. So everyone and that we have the debate around that, and once that is secured then you move along those business plan and then you create the win-win situations for everyone as a whole.

Again going back to the process and timing, I think I have mentioned it, signing of the master agreement that is, we can even add, generally 2013 with regards to today. And then we now are starting down the process of review and approval by relevant authorities, but we also of course then need to create these new commercial vehicle company, the DFCV and all of that now, we don't anticipate to happen within approximately 12 months from today.

Finally, I would like to show you a picture which is number 15 and this is done again, if we would take 2011 total operations including our progress, this is a picture that we now have in China. And with this agreement you can see that we’re moving really to create a home market in its true sense. We will have then or we would have had in 2011, 34,000 employees from China including our partner’s activities and you can see that north of SEK60 billion in turnover. So that is of course a major operation for us and it's something that over the last 10 years, if you go back 10 years and look at the Volvo Group in China compared with this picture, it's an enormous difference and the growth that it grows.

So then here you can see also now that we have both our – the total group is now well represented in China with its agreement. That was little bit the missing link in our global strategy for the Volvo Group and for the Volvo Trucks. So once again, we are extremely excited about this. We have a lot of hard work to be done as everyone is energized and now when we have announced this, we need to looking as to develop this business plan and then ways to approve those procedures from the authorities and then it's growing.

So with that introduction or presentation, I would then like to see and hear if there are any questions that I or Joachim can answer. So operator, please open for questions.

Question-and-Answer Session

Operator

Thank you very much. (Operator Instructions) Your first question comes from (inaudible). Please go ahead.

Unidentified Analyst

Yes, good morning. First question on why now basically from your intention with Dongfeng already 2007 to produce commercial vehicles if I’m not wrong and nothing really happened with that JV, so why now and why not earlier and what has happened in this process, if you can give some more color on that?

Olof Persson

Well, obviously you know, we have DMG joint venture and as in all processes, when it comes to getting into a bigger stream or into a agreement like this, there is a process that goes through a number of stages. I mean one is to get a common ground that is it, what we want. Second is of course then negotiate all the details and third is of course to make sure that you get agreement that is well balanced, that is supporting the strategies, that we are building into win-win situations, and that process is something that has been going on for a while now, and as it happens it was concluded now, and then we more than half way to, we have to announced now today. So it’s a big deals like this, it’s something there is a lot of things that you have to discuss and to make sure that you get things right.

Unidentified Analyst

Secondly, just about the Chinese truck markets, profitability seems relatively poor compared to its other regions and for instance if you look at you Asia business in India, why is that, is there a structural difference in the Chinese markets compared to other emerging markets?

Olof Persson

I think that, I mean what we have to do now is to make sure we are going through and looking into structural issues, but also of course the issues around what we normally do and that is looking into pricing, positioning, cost and all those kind of things. And now our ambition with this joint venture is of course that we will produce good profitability, that is always the case when we can go in and we will utilize the time now and making sure that we line up the different activity.

When it comes to structures, I am looking at you, I can hear, if you want to add something about, if there are any structural changes in China compared to other markets.

Joachim Rosenberg

I think what I can add is, of course that being the largest market in the world, it’s of course sure that it attracts a lot of attention. There are many, many players in the commercial vehicle market in China both domestic but also foreign. I think that's one. And secondly, in the automotive industry in general, the aftermarket is generally a key driver of profitability and the extent that is developed in China, as you compare for instance with Europe, this is not as developed as in Europe. So that would be perhaps a second reflection from my side and then could be others.

Unidentified Analyst

And thirdly, your – on the truck markets there you talked about the value truck that you’re about to launch. How will the acquisition of Dongfeng affect the strategy and will the Dongfeng been a part of that strategy?

Olof Persson

I think as we mentioned in September, at the Capital Markets Day, we were under negotiation of utilizing our DND joint venture as a manufacturing base for that value troughs. And I think today, we have now communicated and officialized this new larger ambition as we would have explained. And then I think, we got 100 negotiation and sort of full talk or the picture, so I think we were going to pursue that into DND joint venture regardless, but of course now its put in a large context. Thanks.

Unidentified Analyst

Thank you very much.

Operator

Your next question comes from the line of Frederic Stahl from UBS. Please go ahead.

Frederic Stahl – UBS

Good morning, Olof. Good morning, Joachim. I am Frederic Stahl from UBS. I just wanted to know, you obviously built up dominating holding in Lingong and I was wondering if you had conversations with Dongfeng and the owners of these assets about the long-term ownership structure, is there an opportunity for you to increase this stake in this company overtime? That’s question number one.

Question number two would be on the margins as well; you must have done some mathematics on what you think is long-term margins here in this company – the new company. And I was wondering if you would share that view?

And then thirdly, if I can ask you, if you ignore the new Dongfeng company here, could you quantify the benefits for the Volvo Group in terms of purchasing, sourcing, maybe you are going to sell engines into this new company, Volvo Engines, if you can give us the numbers both in terms of benefits for the Volvo Group, that would be great? Thank you.

Olof Persson

Okay. Hi Fred. Let’s start with the ownership and as you know the difference between the construction equipment and the truck businesses, that the truck business is under what is called automotive policy and within the automotive policy, there are regulations in terms of the ownership structure. So and that’s – also your question is that, now we have not had any discussions in that respect. It is a 45%, 55% that is what it is, and this is what we’re going to work and make sure that we get good company out of that.

I think in general, you can say that the agreement that we have without going into any details is, I’m very pleased with balancing of a lot of different factors, you’re talking about the ownership structure, the governance structure, the processes, and all of that and there is of course, a lot of details in this agreement that stipulate that, and if you take that as a whole and looking at the balance of that I’m very pleased with the discussions, and the negotiations we have had.

When it comes to customer audience and the improvements, and benefits that we will not today reveal any numbers, we will to understand we still have up to 12 months or we have approximately 12 months until it’s up and running. Of course, we have done a huge amount of calculations, but we would like to keep that to ourselves, because we want to have that now also reconfirm the work done and discuss when we’re looking at the business plan. So I would refrain from any numbers at this point in time.

Frederic Stahl – UBS

Okay. Thank you very much.

Operator

Your next question comes from Andreas Brock from Nordea. Please go ahead.

Andreas Brock – Nordea Bank AB

Hi. Yes, thank you. I have a couple of questions on the JV, and the feasibility study. In the feasibility study, you will have determined, what kind of markets, export market this joint-venture will be eligible for, and how you’re going to work more in China with the Volvo brand. Could you share some details on that please?

Olof Persson

Not running forward, running faster than the transfers with our partners, I would not be too specific, but I can say that we are, if you look at the opportunities that we definitely see is, if we start with the Chinese market and Volvo brand for say, there of course a lot of ideas about, how that can be improved, and also the association being improved and utilizing the local knowledge the distribution and all of that for the Volvo brand. And it is not only the Volvo brand actually, I mean we also have the UD brand in China, and the value truck as we discussed before, as I mean that is the cards that we have to play with and the strategies for that is of course something that we need to deploy. But if you add on all the opportunities, and also add on all the different possibilities that we now have with this base, it is actually a lot of different ways you can go and a lot of them looks very attractive. But again, I would like to make sure that what we have done now, we have announced the agreement, and that would be more over time announcement as we already what everything together with our Board.

Andreas Brock – Nordea Bank AB

I understand. Thank you and just another question and if you can't tell us more about which markets the joint venture, export market to joint venture will be eligible for. Could you share some details on what kind of technologies you are going to add to this JV, and thinking about IGF-2, and will there be licenses agreement with those technologies?

Joachim Rosenberg

I think it is a process to move forward that sort of described, and I don’t think I was going through all the details of that, and it is important I think to emphasize that any licenses as you mentioned will of course in the event they occur, we negotiate it separately between the Volvo Group and DFCV.

Going back to your question on export markets, it is of course so let’s say, if one looks at the global map of trucks, there are a number of countries that this joint venture, you said used to what eligible for, I think you can say that there are a number of them that the joint venture will be interested in to pursue, and I think plus doing the mapping of countries and market, which similar situation of China or an emerging market, than looking at the volumes gives you an idea of which countries would be most attractive for the joint venture in a first wave and that we’ll see.

Andreas Brock – Nordea Bank AB

Understand.

Olof Persson

Adding to that about the technology again the technologies that we may look in the future has to go very much hand in hand with our strategic movements and make sure, that if we done always timed the right technology, with the right products, with the right costs, and so that is something also that is part of the product line for the joint venture, and then of course, it all also dependent on as you know in terms of initial legislations, those kind of things in different parts of the world in China or on the exports markets. It is rather complex, this is something that we’ll be work through over time.

Andreas Brock – Nordea Bank AB

Thank you. And then my final question, you said about the aftermarket business is structurally very different in China, you mentioned for example, it's not as developed et cetera. But could you give us more details on how the aftermarket business is different in China compared to the Western market in terms of structure, and how do you think that is going to change going forward? That's my final question.

Olof Persson

Fair, thank you. Well, I think what I can say is that, in general not only China, if you look at non-European manufacturers; they have relative emphasis on the aftermarket. It's a relatively, I would say on a relative scale lower than it is for the European manufacturer. That goes for Indian manufacturers, it goes for Chinese manufacturers, it goes for Korean manufacturers et cetera, et cetera. So it is of course so that if we have a more mature way or balanced way of looking at that, then we have that knowledge and expertise and that is something that we will inject into this joint venture going forward.

Andreas Brock – Nordea Bank AB

Perfect. Thank you so much.

Olof Persson

Thank you.

Operator

Question comes from Laura Lembke from Morgan Stanley. Please go ahead.

Laura I. Lembke – Morgan Stanley & Co.

Yeah, good morning. I actually have two questions on the China truck market and first-one obviously, the market had tremendous growth in recent years, and as a result, I think the density of the truck fleet is probably much higher than in other countries, and now we've seen two years of quite drastic decline. So I am just wondering and keeping this cons in mind, what do you think is the sustainable level of demand in China going forward, and what kind of implicit growth assumptions, would you put into your forecast for the new joint venture?

And then the second question is, given that the market is still very fragmented, do you think the introduction of new emission standards which now seems to have come back into discussion quite recently especially in Beijing, and could actually accelerate the industry consolidation that we see in China, thank you.

Olof Persson

When it comes to the market and I think that in general, you can say that we do of course see a long-term that is to say and markets that has a lot of opportunities then you will have ups and downs in the market between the years, and first, we are of course looking and that’s one of the reason that we’re doing this is of course, we believe in the Chinese markets long-term, and that is based on population, it’s based on sort of functionalities based on the need and demand for transportation in the country looking long-term.

I don’t want to really speculate on any long-term growth rates or really growth rates on that, but generally speaking we of course do see long-term, and this agreement is of course very long-term view on that we have across the market development. When it comes to the technology perhaps Joachim, you want to elaborate that a little bit?

Joachim Rosenberg

Yes, I think what I would say is, if we disregard your question related to emissions, I think there is a state that ambition from the Chinese government to consolidate the auto industry in China across different product lines, that is quite public and a quite clear ambition. Then to your point, will be emission, evolution driven in parts and wider recent situation will have to drive and accelerate that consolidation. I guess it could be that the case, but that is speculation of course, but the ambition from the government to consolidate it’s clearly is there.

Laura I. Lembke – Morgan Stanley & Co.

Can I just follow-up on that because I mean it seems at the moment, I mean when we look all the emission standard and emissions have so far been delayed in China, and I think part of the reasons that none of the local players have actually able to fulfill them. So do you think there is now a little bit of a change in how the government thinks about this topic?

Olof Persson

Well, I can conclude that when you are in China today, and I compare with six months ago or 12 months ago, it is of course so that given also there is a recent whether two weeks back, which was capable all over the world, this topic is very much increased in communication. And if you read the newspaper here in China, you cannot, it’s not a single date passes without a discussion in the papers, so it is of course in people’s mind, absolutely.

Now a key driver is of course some of us have that technology as you know it is of course that the fuel quality and the sulfur content in the fuel need to be at the level, which is possible to introduce that technology, and that, it’s not always the case in China.

Laura I. Lembke – Morgan Stanley & Co.

Okay, thank you.

Olof Persson

Thank you, very much.

Operator

The next question comes from [Alex White] from Volvo. Please go ahead.

Unidentified Analyst

Yeah, hi everybody. Thanks for having hosting the call. Just trying to understand the margins a little bit better and the opportunities there, I wonder if you can give us some indication of just what proportion of sales the aftermarket is currently, and I mean, is it just the case of expanding or developing that aftermarket offering or so, there is some structural customer behavior type change that have to happen as well, and I guess for the some indication of the timelines that we are thinking about there in changing that behavior?

Second question was on the Chinese truck market, just some indication of how it works, is similar to the U.S. where you have the third-party engine going into some of the trucks. So are all of the trucks that are being produced in this JV, are they all using your own engine? Thanks.

Olof Persson

Thank you. I think on your question, I guess, I won’t be too specific, but let’s just say it on average, the relative proportion of sales and aftermarket represent in China, it’s less than what it is for typical European manufacturers, and in addition to that, the margins are lower than it would be for a typical European manufacturer then including the Volvo Group. So there are opportunities both, but a volume wise and profitability wise to improve over time.

and on your second question, I would say that Chinese is more integrated, is more similar to Europe than it is to the U.S., it is generally so that if you have both, go for truck and then you go on service that don’t go leadership, which is more European model than it is the U.S. model.

Unidentified Analyst

Okay. Thank you.

Operator

The next question comes from (inaudible). Please go ahead.

Unidentified Analyst

Yes, thank you. Can you talk a little bit about how you see the Chinese truck market developing, I guess what you’re saying right now, is that you are primarily selling trucks on price, but the development our aftermarket says that it touched upon, I guess we will see an improved demand for trucks sold through life cycle costs like you do more in the U.S. and in Europe. How does that look right now? Is there any demand for more advanced trucks, at the moment? And how do you see that developing?

Joachim Rosenberg

There is a demand for what you refer to as more and more trucks, I mean the Volvo Group as a whole of percent that is selling both Volvo trucks and duty trucks, and Renault trucks, and few Mack trucks into the Chinese market today, so of course there is a demand for more sales trucks.

And having said that it is of course so that the market’s development in China and in other countries, is a journey and how quick is that journey evolves, I guess remains to be seen, so overtime I think the kind of behavior that you are associating, will be more and more prevalent of how quickly that goes, I think I don’t want to speculate things..

Unidentified Analyst

And in such a scenario, I guess that the total volumes in China will be lower because you are utilizing the trucks much, much more if you have the high quality trucks or so, I guess the volumes that we’re seeing today is perhaps not representative for what we’ll be see in the future, is that how you see it?

Olof Persson

Well, I think there are different theories there, someone before talked about the density of the truck, people there are different opinions about that also, once could conclude it though is that both that the Chinese manufacturers in general, and now Dongfeng in particular, we will of course, also look at export opportunities, realizing the domestic possibilities, with the international opportunities. So I guess that’s how we’ll take it, then you also have us and talked about the aftermarket, which involves of course you have the basics in terms of spare parts and maintenance, but then over time aftermarket matures there will be a broader set of aftermarket probabilities similar to what we are seeing in another markets. So I think the growth opportunities in general are of course there and that is important for us on the groups making.

Unidentified Analyst

And just I didn't really get your answer previously on, if there was some structural changes that are expected to take place in profitability prospect or is it mainly a increase of the aftermarket business?

Olof Persson

I’m not sure I understand, can you repeat what you mean with the structural changes you mean related to....

Unidentified Analyst

If there are some restructuring at a plant or is it mainly a aftermarket case for boosting profitability, was the question about.

Joachim Rosenberg

I think as I have mentioned also someone asked, it is of course so that the Chinese government has clearly stated ambition for the truck market, for the car market and for other parts of aftermarkets to consolidate. And I think that's one. And then the question was whether the emission, evolution would accelerate that or not, and I think that's remains to be seen.

Unidentified Analyst

Okay, thank you. And on you said that you would use the JV for the base for the value truck is, can you say something about the brand for this truck, if that also goes without saying that it is one of the Dongfeng brands or is that not the case?

Joachim Rosenberg

I think we chose not to communicate that in September, and I think we're sticking to that policy for now.

Unidentified Analyst

Okay. And the last question for now is it possible, was there any plans for utilizing the dealer service network for Volvo branded trucks as well?

Joachim Rosenberg

I think Olof alluded to that during his presentation that is an asset, that the service network is an asset, access to that is an asset itself and exactly how we utilize that asset on many ways that could possibly be used going forward.

Unidentified Analyst

That is not part of the defined business done, as of yet or…

Joachim Rosenberg

I’m not going to the details of that in this time so…

Unidentified Analyst

I understand.

Olof Persson

Product is an asset advantage, and the network is also in this case a great asset and exactly, how we choose in the DFCV together with appropriate then to leverage that, I think that’s resulting to be, I’m working on.

Joachim Rosenberg

Add to that, if you look and we can look later on page 13, with at least all the different areas that we’re discussing, and declaring in the business plan, and there we definitely have, issues like set the marketing strategies, you have the aftermarket acceleration strategy, you have export opportunities, defined amplified sourcing optimization, the product plan, and so and so forth, and all these area should be looked at in combination with slide showing the main benefits.

And if you add these two together the main benefits and the business plan, you see very clearly that there are a number of combinations here that looks very attractive, and a lot of ideas that we can start to play within, and that’s the key issue for me here, and now we have the base, and we have the partner. With the critical mass, with the local knowledge, with everything that goes into the China’s market in terms of size, and production, reputation and brand, and now we adding on this business plan together, we’re focusing on win-win situations, and this is now what is going to be evolving, and of course, we don’t have all the answers today. We have done a lot of analysis. We have done a lot of computations and calculations, and but now, of course this has to be transformed during these 12 months or the approximate 12 months that we’re looking at here, into this business plan.

And then we’ll execute that’s compared to the strategy, like we do for – so just the combinations here of this slide of the business plan and the main benefits we’ve shown it today makes me very excited, and also in terms of the development, and then it’s going to be a lot of hard work of course and realizing the issues.

Unidentified Analyst

Thank you, and one more question if I may, your overall group target of improving profitability, that you have presented that your CMD, how this joint venture fit into that plan.

Olof Persson

We have the targets and as someone said, the target is a target, is a target, is a target, and that is a target, and as you are very well aware of when you set targets, in the beginning of a three year period, you will get a lot of things going up and down, and here and there, during the period as we’re executing, but that’s our job to make sure that we’re balancing all this to reach the target, so I don’t know, if it was a clear enough answer.

Unidentified Analyst

Thank you. Very exciting news today, thanks.

Olof Persson

Thank you very much.

Operator

The next question comes from (inaudible). Please go ahead.

Unidentified Analyst

Yes, I have two questions, and the first is could you comment anything on how this would effect the jobs, and also the subcontractors working in Sweden today, and maybe also if you see any problems coming up with the authorities that are supposed to approve of this deal, and is it would be possible, could you just shortly repeat the answers in Swedish for us at the late night show in news calendar?

Olof Persson

On your last portion, I can very well call you up and that we could do…

Unidentified Analyst

Okay.

Olof Persson

You can ask and I would do indirectly, and I think you’ll get the best quality out of that also.

Unidentified Analyst

Yeah that would probably be the best.

Olof Persson

All right. I’m glad to do that. And when it comes to the job situation in Sweden, our experience is when we do this kind of joint ventures and that where we establish ourselves in a growth market that that actually creates activities and thereby jobs in our whole system including Sweden. That is our experience up until now, that goes both for our own staffs, the Volvo Group staffs but also an higher activity level with these our suppliers, because we have to remember that that this joint venture is for the Chinese market, it’s very well, already established in the Chinese markets, and it’s a big player in the Chinese market, and that is what we get access to and those activities are normally creating more activities, and more jobs over time also in Sweden.

When it comes to the authorities and the approval process, there is nothing that we can see today, but I don’t want to speculate that this is a process for the authorities and expire in their process, that is deciding it. So I’m humbled to that process, and we’re going to worship, and making sure that would imply what we need to do, but we don’t see anything today, but again, it is not our process.

Unidentified Analyst

Okay. Thank you very much.

Olof Persson

Thank you. I’ll talk to you later.

Operator

Thank you.

Olof Persson

Okay.

Operator

Thank you. There are no further questions at this time.

Olof Persson

Okay, then I really appreciate that you took the time on a Saturday to call in and get an update, and share this with us. It’s very exciting news that we are presenting today, and thank you very much for good questions and a good discussion. We would have reason to come back to this, of course over the years to come. This is a long-term investment that we are doing, and I think it’s strategically a very, very important step to the Volvo Group and the Volvo Group Trucks today announced. So have a very good remaining part of the weekend, and thank you very much for joining, and for now bye, bye.

Operator

Thank you, very much. That does conclude our conference for today. Thank you for participating, you may all disconnect.

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