Scania annual report 2004

New trade routes
increase transport needs
The need for transport services follows economic developments. Economic growth leads to higher
consumption, which increases the need for transport services.
The broad upturn in the world economy
during 2004 led to an increase in the demand
for heavy vehicles in most markets,
although high oil prices had a certain
dampening effect.
In most markets today, only trucks can
offer the flexibility and delivery assurance
necessary to ensure that supply chains
and logistics systems will work.
EUROPE
Western Europe accounts for nearly 70
percent of Scania’s sales. Here vehicle
standards are very high and the mostly
highly specified vehicles are sold.
The transport industry and distribution
systems are advanced, which makes
operating reliability and service important
competitive factors and increases the
potential for selling services.
In these markets, Scania owns most
of its sales and service organisation. This
provides direct contact with customers,
who not only buy vehicles today but also
maintenance, financing and other services.
Such close customer contact is invaluable
for Scania’s product development, both
when it comes to vehicles and various
service-related products.
As Europe has become more integrated,
trade flows across the continent have
intensified. The largest consumer markets
lie in the west, while more and more
goods are being produced in central and
eastern Europe. This creates very large
transport needs. In order to be close to
customers, Scania’s investments in its
sales and service network are following
the same pattern.
Used trucks go east
Scania’s new truck range is being marketed
initially in the major markets of western
Europe, where a natural renewal of existing
fleets is underway. Meanwhile western
European transport companies need to
replace used vehicles that are being sold
onward to customers in the countries of
central and eastern Europe.
These countries have a different cost
structure, and there is a large demand
for used quality vehicles because of the
massive economic build-up effort that is
underway. Since used vehicles require
more maintenance, service business is
rapidly growing in these countries. Meanwhile
there will be a structural effect on
demand in western Europe for the next
10–15 years.
The total transport market in Europe is
worth an estimated 180 billion euro* per
year and will grow by an average of 5–6
percent every year, with faster growth in
the new EU countries.
An equally high growth percentage is
expected in trade between Europe and
Asia, which today amounts to 360 billion
euro* per year. Given newly constructed
transit routes to the Middle East and East
Asia, the transport flows to and from the
Asian continent will change. It will be possible
to move cargo by land from Bangkok
to Berlin in 7–10 days, compared to a
shipping time of several weeks by sea.
In western Europe, new registrations
totalled about 230,000 heavy trucks, compared
to 213,000 during 2003. Scania’s
share of the western European market
was about 30,000 units (13 percent).
Record year for bus sales
Scania’s bus and coach sales developed
favourably and reached 5,519, the best
to date. After several years of low demand,
sales in South America reached
earlier levels. Brazil was Scania’s largest
single bus market. In a shrinking total
market in Europe, Scania consolidated
its position.
The integration of bus and truck operations
continued during the year. From
January 2005, all of Scania’s free-standing
bus and coach companies in Europe have
been integrated into the existing distribution
companies in their respective markets.
Integration with the truck business has
enabled Scania’s bus business to streamline
its organisation. This was reflected in
ever-larger contributions to Scania Group
earnings and strengthen its competitiveness.
TRENDS AND INDUSTRY DEVELOPMENTS • SCANIA ANNUAL REPORT 2004 22