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Annual Report 2012                                                       2245144/EN/Kreab Gavin Anderson/Trosa Tryckeri, 2...
Scania’s objective is to provide the best profitability for its customers throughout the product life cycle by delivering ...
CONTENTS                                                                    OPERATIONS                                    ...
SCANIA IN BRIEF    Scania in figures                                       Operating income fell to SEK 8,300 m. (12,398) ...
SCANIA IN BRIEFKEY FIGURES                                                                                                ...
SCANIA IN BRIEF    Scania, 2012    Scania is one of the world’s leading manufacturers of trucks    and buses for heavy tra...
SCANIA IN BRIEFSöDERTäljE                                 lUlEå                                              FRAMES  TRUCK...
STATEMENT OF THE PRESIDENT AND CEO    Good opportunities in uncertain market conditions                           In the u...
STATEMENT OF THE PRESIDENT AND CEOone third of a haulier’s operating cost consists of fuel.    able corporations in the Wo...
SCANIA ExECUTIVE BOARD                             Scania Executive Board                             Market demands and c...
SCANIA ExECUTIVE BOARD                                                                                     Andrea Fuder, E...
SCANIA ExECUTIVE BOARD                            Our core values and leadership philosophy, combined                     ...
SCANIA ExECUTIVE BOARDthus high priorities. Regardless of what work they do,or in what part of the world Scania products a...
SCANIA’S STRATEGY12   O per atiO ns sca nia 2012
SCANIA’S STRATEGYScania’s strategic platformScania’s objective is to provide the best profitability for its customers thro...
SCANIA’S STRATEGY14   O per atiO ns sca nia 2012
SCANIA’S STRATEGYDriving forces for demandWhat drives the demand for Scania’s products and services is economic growth. Me...
SCANIA’S STRATEGY                           Profitable business through                           customised solutions    ...
SCANIA’S STRATEGYDemands for high uptime and reliability make Scania engines well suited in con-     Mining transport serv...
SCANIA’S STRATEGY                                                                                                         ...
SCANIA’S STRATEGYComponent modularisationThe wide range of choices available to customers is achieved through the design o...
SCANIA’S STRATEGY                            Services support the customer’s business                            Through i...
SCANIA’S STRATEGYto be authorised by Scania. A vehicle that has been             Financing and insurance a key elementcont...
SCANIA’S STRATEGY      The world’s tallest      concrete pump      Zoomlion, a Chinese-based construction      machinery m...
Scania Annual Report 2012
Scania Annual Report 2012
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Scania Annual Report 2012
Scania Annual Report 2012
Scania Annual Report 2012
Scania Annual Report 2012
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Scania Annual Report 2012

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Scania’s annual report for 2012 is available from today on www.scania.com

The annual report describes, among other things, Scania’s operations, strategy
and financial performance and is available in English and Swedish.

Distribution of the printed version is under way to the shareholders and other stakeholders who have chosen to receive it.

It is possible to order the annual report and other financial information via
Investor Relations, www.scania.com/ir

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Transcript of "Scania Annual Report 2012"

  1. 1. Annual Report 2012 2245144/EN/Kreab Gavin Anderson/Trosa Tryckeri, 2013 Scania AB (publ), SE-151 87 Södertälje, SwedenTelephone: +46 8 55 38 10 00. Fax: +46 8 55 38 10 37 www. scania .com
  2. 2. Scania’s objective is to provide the best profitability for its customers throughout the product life cycle by delivering optimised heavy trucks and buses, engines and services – thereby becoming the leading company in its industry. Scania’s operations are based on the company’s core values, its focus on working methods and dedicated employees.2 March. Scania switched to fossil-free fuel in its internal transportservices. Using renewable bioethanol as a fuel instead of fossil-baseddiesel will reduce the climate impact of carbon dioxide emissions fromScania’s internal goods transport services in Södertälje, Sweden, byabout 70 percent. Annual Report and financial information Website Scania shareholders are the main target group for the On Scania’s website, www.scania.com, it is easy to Annual Report, which is sent to those who have ordered follow events at the company during the year, monitor it. All new shareholders receive a letter welcoming them Scania’s share price and compare its performance to Scania’s shareholder services, where they may order with that of competitors, as well as see the latest 17 April. The Swedish Transport Academy in Erbil, northern Iraq was the information they want, in the format and quantity transactions, share price history, dividend history and inaugurated by Sweden’s Minister for Trade, Ewa Björling, and other officials. they wish. They may subscribe to the Interim Reports, other share data. Shareholders can also calculate the The training is targeted at young unemployed Iraqis with a secondary school the Annual Reports, the shareholder magazine Scania return on their own holdings. The website also provides background and offers occupational skills demanded in the transport sector. Value, invitations to the Annual General Meeting and press historical financial data, truck registration statistics, key The establishment of the school is a result of close collaboration between releases via e-mail, order printed Annual Reports, Interim financial ratios and much more. Scania, local government, the Swedish business community, international Reports and Scania Value. organisations and development agencies. In addition, other stakeholders have the opportunity to subscribe to financial information via Scania’s website, where it is also possible to order printed information in24 April. Scania introduced the powerful single copies and have them sent.1,000 hp V8 marine engine with a “testand ride” in the Stockholm archipelago for Financial information is available in Swedish andselected customers and media. In late 2012, English and may be ordered from Scania AB,the engine was also launched in the North Investor Relations, SE-151 87 Södertälje, Sweden,American market at the International Work telephone +46 8 553 810 00, or at www.scania.com/shareholderBoat Show in New Orleans, USA. www.scania.com/subscribe www.scania.com/printedmaterial 16 November. Scania signed an agreement to deliver up to 3,000 Tier 4i emission-compliant engines for aircraft dispatch towing and pushback vehicles.This English version of Scania’s Annual Report is a translation of the Swedish-language original, the binding version that shall prevail in case of discrepancies.Translation: David Murphy, Word of Mouth and Victor Kayfetz, Scan Edit. The Financial Reports encompass pages 72–133 and were prepared in compliance withInternational Financial Reporting Standards (IFRSs). The Report of the Directors encompasses pages 26–70 and 134–135. The Report of the Directors and accompanying Photos: Carl-Erik Andersson, Peggy Bergman, Dan Boman, Javier Campos, Vinayak Das, Conny Hetting, Lucas Holm, Petter Magnusson, Jonas Nordin,Financial Reports also fulfil the requirements of the Swedish Annual Accounts Act and have been audited by Scania’s auditors. Scania’s Swedish corporate identity number: Kjell Olausson, Silvio Serber, Tedd Soost, Lennart Ström, Jeremy Tennant, Göran Wink, Glamour Photographics and Hung Chung Chih / Shutterstock.Scania AB (publ) 556184-8564. Unless otherwise stated, all comparisons in this Annual Report refer to the same period of the preceding year.
  3. 3. CONTENTS OPERATIONS 2–25 Scania in brief 2 Statement of the President and cEO 6 Scania Executive Board 8 Scania’s strategy 12 Scania’s strategic platform 121 September. Martin Lundstedt took over as President and Driving forces for demand 14CEO. On the same date, changes were also implemented in Profitable business through customised solutions 16Scania’s Executive Board. Scania’s modular system 18 Services support the customer’s business 20 Methods for profitability 24 REPORT OF THE DIRECTORS 26–70, 134–135 Market trends, 2012 26 Production 32 Research and development 36 Scania’s sustainability work 40 Ecolution by Scania − a comprehensive solution 40 People and collaboration drive sustainability efforts 42 Moving goods and people while influencing attitudes 448 September. Gabriel Warde from Ireland won Collaboration throughout the value chain 46the Young European Truck Driver (YETD) 2012 Risks and risk management 50competition, part of a global initiative promoting Scania share data 54responsible and safe driving started by Scania articles of association 56in 2003. More than 17,000 young truck drivers corporate Governance Report 57under the age of 35 from 24 European countries Board of Directors, Executive Board and corporate Units 63participated. Group financial review 68 FINANCIAL REPORTS 71 –133, 136–143 consolidated income statements 72 consolidated balance sheets 74 consolidated statements of changes in equity 76 consolidated cash flow statements 77 notes to the consolidated financial statements 78 Parent company financial statements, Scania aB 130 notes to the Parent company financial statements 132 Proposed guidelines for salary and other remuneration 134Dr Melinda Crane, Deutsche Welle-TV; Siim Kallas, EU Commissioner Proposed distribution of earnings 135for Transport; and Martin Lundstedt with Gabriel Warde.12 November. Scania organised a conference in Brussels audit report 136on sustainable transport development. This regularly Quarterly data 138recurrent meeting brings together the transport industry Key financial ratios and figures 140with representatives of public authorities and the European Definitions 141Union to discuss what can be done and what is required to Multi-year statistical review 142reduce the environmental impact of the transport sector. annual General Meeting and financial information 144 Scania 2012 1
  4. 4. SCANIA IN BRIEF Scania in figures Operating income fell to SEK 8,300 m. (12,398) and earnings per share fell to SEK 8.31 (11.78). Net sales decreased by 9 percent to SEK 79,603 m. (87,686). Cash flow amounted to SEK 3,025 m (6,970) in Vehicles and Services. The Board of Directors proposes a dividend of SEK 4.75 (5.00) per share. Vehicles and Services Operating income in Vehicles and Services totalled SEK 7,694 m. (11,881) during the full year 2012. Lower vehicle deliveries and lower capacity utilisation pulled down earnings, as did higher costs for future-related projects. Pressure on truck prices, mainly in the European and Brazilian markets, also adversely impacted margins. Financial Services Operating income in Financial Services rose to SEK 606 m. (517) during the full year 2012, compared to the corresponding period in 2011. The improved earnings were due to a larger portfolio. Bad debt expenses decreased to SEK 290 m. (298) during the year. Nettoomsättning per produktområde ENG Avkastning på sysselsatt kapital (ROCE) ENG Kassaflöde ENG NET SALES RETURN ON CAPITAL CASH FLOW BY PRODUCT AREA EMPLOYED (ROCE) Miscellaneous 2% Trucks 61% % SEK m. Used vehicles 6% 50 12,000 40 10,000 Services 21% 8,000 30 6,000 Engines 2% 20 4,000 Buses 9% 10 2,000 0 0 08 09 10 11 12 08 09 10 11 122 O per atiO ns sca nia 2012
  5. 5. SCANIA IN BRIEFKEY FIGURES 2012 2011 2010Deliveries, number of vehicles 67,401 80,108 63,712Net sales, SEK m.Vehicles and Services 79,603 87,686 78,168Operating income, SEK m. 8,300 12,398 12,746Operating margin, percent 10.4 14,1 16,3Income before taxes, SEK m. 8,281 12,612 12,533Net income for the year, SEK m. 6,640 9,422 9,103Earnings per share, SEK 8.31 11.78 11.38Cash flow, SEK m.Vehicles and Services 3,025 6,970 11,880Return, percent on equity 19.2 29.5 34.7 on capital employed, Vehicles and Services 22.8 38.1 39.5Net debt/equity ratio*Vehicles and Services – 0.31 – 0.35 – 0.30Equity/assets ratio, percent 30.9 31.6 30.5Net capital expenditures, excluding acquisitions, SEK m.Vehicles and Services 4,480 3,776 2,753Research and development expenditures, SEK m. 5,312 4,658 3,688Number of employees, 31 December 38,597 37,496 35,514Employee turnover, percent 11 9 8Healthy attendance, percent 96.7 96.8 96.7Energy consumption, GWh 616 649 652CO2 emissions, ktonnes from production 75.3 79.1 81.4 from goods transport services** 191.6 232.5 164.7* Net debt (+), net surplus (–).** The changes from year to year follow production volume and country of delivery. The scope of data gathered has also expanded. Medarbetare – frisknärvaro globalt ENG miljö – energi ENG Antal producerade fordon per anställd keyfigures ENG koldioxid produktion keyfigures ENG ENERGY CARBON DIOXIDE VEHICLES PRODUCED HEALTHY ATTENDANCE PER EMPLOYEE MWh per vehicle Total, GWh Tonnes per vehicle Total, ktonnes Vehicles produced per employee % 30 800 5 96.2 96.6 96.7 96.8 96.7 100 8 100 25 600 4 80 6 75 20 3 60 15 400 4 50 2 40 10 200 2 25 5 1 20 0 0 0 0 0 0 08 09 10 11 12 08 09 10 11 12 90 95 00 05 10 12 08 09 10 11 12 O per atiO ns sca nia 2012 3
  6. 6. SCANIA IN BRIEF Scania, 2012 Scania is one of the world’s leading manufacturers of trucks and buses for heavy transport applications, and of industrial and marine engines, with a sales and service organisation in more than 100 countries. In addition to sales and services, Scania offers financial services in many markets. Scania’s production units are located in Europe and Latin America. Scania has approximately 38,600 employees. Of these, some 17,400 work with sales and services as well as Financial Services in Scania’s own subsidiaries worldwide. about 12,600 people work at production units in six coun- tries and regional product centres in six emerging markets. BUSES Scania’s Head Office is located in Södertälje, Swe- TRUCKS AND den, where a total of 5,200 people work with sales as COACHES well as administrative and other tasks. also in Södertälje are Scania’s research and development operations, with AxLES GEARBOxES about 3,400 employees. Scania’s central purchasing department in Södertälje is supplemented by local procurement offices in Poland, ENGINES CABS the United States, china and Russia. Scania has a global production network into which all units around the world are integrated. This provides high GEARBOx SÃO PaUlO flexibility and cost-effective production. Working methods, COMPONENTS TUcUMÁn quality standards and environmental standards are the same at all production units. To strengthen its position in key emerging markets, Scania is establishing regional product centres for assembling, bodyworking and fitting out locally adapted vehicles. SALES AND DELIVERIES BY REGION, 2012 America Europe Africa and Oceania Trucks* 15,391 units Trucks 27,720 units Trucks 3,053 units Buses and Coaches* 2,738 units Buses and Coaches 1,312 units Buses and Coaches 798 units Engines 2,582 units Engines 3,664 units Engines 194 units Services SEK 2,475 m. Services SEK 11,601 m. Services SEK 1,168 m. * Refers to Latin America4 O per atiO ns sca nia 2012
  7. 7. SCANIA IN BRIEFSöDERTäljE lUlEå FRAMES TRUCKS BUSES AND REAR AxLES COACHES REAR AxLE HOUSINGS AxLES GEARBOxES ENGINESOSKaRSHaMn CABS ST. PETERSBURG SŁUPSK MEPPEl anGERSzWOllE BUSan TRUCK TRUCK COMPONENT BUS ASSEMBLY ASSEMBLY PAINTING BODYWORK TaiPEi DUBai KUala lUMPUR ■ SalES anD SERVicES jOHannESBURG ■ REGiOnal PRODUcT cEnTRE PRODUcTiOn ■ RESEaRcH anD DEVElOPMEnT Eurasia Asia Trucks 6,798 units Trucks 8,089 units Buses and Coaches 198 units Buses and Coaches 1,304 units Engines 96 units Engines 527 units Services SEK 597 m. Services SEK 1,251 m. O per atiO ns sca nia 2012 5
  8. 8. STATEMENT OF THE PRESIDENT AND CEO Good opportunities in uncertain market conditions In the uncertain economic situation facing us, it is important that we concentrate our resources and set the right priorities. Meanwhile, we know that demand for vehicles and services will increase once economic activity recovers. We will strengthen our presence in emerging markets and continue to develop new high quality products that boost customer profitability – this is our focus for 2013. Economic growth is the main force driving the This will enable us to strengthen our competitiveness. demand for Scania’s products and services. last in the coming years, a large proportion of Scania’s year, 2012, was dominated by low economic activity growth potential will be outside Europe. in addition to in many regions. in a number of markets, customers prioritised development projects, we will continue to were hesitant about placing orders for new vehicles. devote major resources to strengthening our presence This was particularly true in our largest region in emerging markets. – Europe. During the first half, deliveries in latin These efforts have been very successful in recent america were affected by an economic slowdown years, with rising sales in many markets, including and by the transition to engines with higher environ- latin america and Southeast asia. nowadays Brazil is mental standards, while political unrest dominated not only our largest market for vehicles and engines, many markets in the Middle East. The number of units but also one of our largest markets in terms of service sold is the single most important revenue. Scania has enjoyed a factor for Scania’s earnings trend. strong position in the Russian truck During 2012, deliveries declined We are convinced that market for many years, and service by 16 percent, and operating carefully conceived sales are also growing strongly income fell by 33 percent to SEK there. sustainability work is 8,3 billion. This growth does not come Our service sales were stable, essential for generating without challenges, but we have with growth in many regions out- profitability and achieving worked purposefully over the years. side Europe. This stable trend is long-term success.” We have built six regional product a direct result of the growth of centres for assembly, bodyworking our vehicle populations, due to and fitting out of locally-adapted increased sales in emerging markets in recent years. vehicles, thereby enabling us to cut lead times for The lower demand for new vehicles resulted in vehicles and parts. More facilities of this type are in the price pressure which also affected Scania. Scania pipeline. We are collaborating with partners to increase is good at adapting to demand, which is illustrated the number of service points, and we have established by our high profitability compared to the rest of our some 20 modularised field workshops in order to get industry. The stronger Swedish krona contributed to closer to our customers’ operations. Scania assis- pressure on profitability, especially during the second tance mobile service units represent another oppor- half of 2012. Scania has a large proportion of its cost tunity to boost our local presence with a competitive base in Sweden. level of service. This year has started in the same way that 2012 Developments in asia and in other parts of the ended, with great uncertainty about the economic world are moving quickly, implying great opportuni- situation, a continued strong Swedish krona and ties for Scania. in china, large investments have continued price pressure on vehicles. This is why we been made in various types of production equip- will continue to adjust the cost level in all parts of the ment, while logistics systems have not kept pace with company. But we will not compromise on our first developments. There will also be greater focus on the core value: customer first. We will prioritise develop- environmental impact of logistics systems. Overall, ment projects that lead to new products and services these trends point towards increasing demand for the that give our customers the potential to boost their solutions that Scania sells. revenue and reduce costs. We are continuing to in our home market, Europe, fuel consumption is a strengthen the quality of our products and services. central issue for our customers, more than ever. about6 O per atiO ns sca nia 2012
  9. 9. STATEMENT OF THE PRESIDENT AND CEOone third of a haulier’s operating cost consists of fuel. able corporations in the World”. We are convinced thata large proportion of our Research and Development carefully conceived sustainability work is essential forresources are concentrated in this field. There is also generating profitability and achieving long-term suc-a strong connection between fuel consumption and cess.sustainable transport services. We must decouple Despite economic uncertainty, there is no doubt thatincreased transport volume from increased emissions we have many opportunities. Our modular product sys-if we are to meet the future demands imposed on us by tem, a strong focus on service business and flexibility atcustomers, legislators and society in general. production units are some of our success factors. Our it is important to emphasise that there is no conflict dedicated employees, who continually find new ways tobetween our business model and reduced emissions. improve the company’s operations, constitute our mostin fact, the pursuit of sustainability and reduced emis- important resource.sions gives us the potential to expand our presence in My predecessor, leif östling, who led Scania forEuropean markets, both in vehicle and service sales. 23 years with volume growth from 30,000 to 80,000Today we see the positive effects that our Ecolution vehicles, introduced a leadership philosophy of con-by Scania concept generates for our customers: fuel tinuous improvements. Today that philosophy per-savings of 10–15 percent, sometimes even more. meates Scania’s corporate culture. This means thatcarbon dioxide emissions are correspondingly the competency of the individual employee is utilisedreduced. Ecolution by Scania involves a systematic and developed, so that each person can assumeapproach to optimising vehicles and services, based major responsibility for raising productivity. initially,on a good understanding of the customer’s operations this philosophy was about continuous improvements,and industry. Ecolution by Scania brings us closer to first and foremost in the production network. Today itthe customer, enabling us to work with continuous applies to the entire company. This corporate cultureimprovements based on a holistic perspective. These provides the basis for Scania to grow profitably.services include maintenance programmes as well as When i took over as President and cEO in Septem-driver coaching and training. Using the on-board digital ber 2012, Scania renewed its Executive Board, whichScania communicator, which is fitted in many vehicles, is continuing to develop Scania’s unique strengthswe can measure and follow up fuel consumption in based on new perspectives. last year was dominatedeach individual rig. by some headwinds. Thanks to the dedication of our Besides contributing to our customers’ sustain- employees and their fine efforts during 2012, Scaniaability efforts, we raised our own profile in the sustain- will be well-positioned when demand recovers. i wouldability field in 2012. During the year, Scania embraced like to express my deep gratitude to everyone who hasthe United nations Global compact, an initiative for contributed to this.companies committed to sustainability and responsiblebusiness practices, based on ten principles concern-ing human rights, labour standards, environment andcorruption. We also climbed nine places to no. 27 in Martin lundstedtcorporate Knights’ list of “Global 100 Most Sustain- President and CEO O per atiO ns sca nia 2012 7
  10. 10. SCANIA ExECUTIVE BOARD Scania Executive Board Market demands and customer expectations are constantly evolving. For Scania, it is a matter of continually reviewing its strategies and developing a business model based on a global perspective. The quality of Scania products and services is crucial to the company’s leading position. The task of the Executive Board is to promote further collaboration between departments and a holistic view of our operations. Since September 2012 the Executive Board has consisted of eight members. Martin Lundstedt Our brand evolves in response to new cus- tomer demands. Scania should stand for more than just a good vehicle. Scania should deliver the best profitability by offering transport solutions that sup- port customers in their day-to-day business.” One of Scania’s strengths is that at all levels, we work to maintain a high level of transparency between differ- Henrik Henriksson, Executive Vice President, Head of Franchise and Factory Sales. ent parts of the company. On the Executive Board, we have monthly meetings where all members participate and weekly pulse meetings to follow up. We enjoy a Henrik Henriksson good dynamic and all angles are explored, for example when it comes to market strategies, capacity expan- The most important aspect of my job as sion, leadership issues and development projects. This Head of Franchise and Factory Sales is to listen to is further strengthened by the fact that the Executive customers and ensure that their needs determine Board sits together in an open-plan office in order how we set our priorities.” to ensure a process-oriented approach and cross- functional collaboration. Scania shall always be quicker than the competition in Scania will continue to act as an efficient small offering customers the combinations of products and company that works close to the customer and that services that improve their operating economy. Our has quick internal decision-making processes. With unique modular product system makes this possible, our new Executive Board, we have strengthened our since we can add new components featuring improved potential to make further progress along this path. performance without needing to change the surround- ing components. Markets outside Europe represent a great potential for Scania and we prioritise investments so we can follow our customers into new markets and seg- ments. We work more and more with comprehensive solutions, and we have strengthened the organisation to handle more complex business transactions, for instance in the mining and forest product industries. another trend, of course, is the increasing focus on fuel prices, not only in Europe as earlier but all over the world. One of our ways of setting a new fuel-efficiency standard is Ecolution by Scania. Together with the customer, Scania sets fuel consumption targets, specifies vehicles and services to suit a given transport task, trains drivers and continually follows up their driving style. To date, the results have been gratifying. This also represents a great opportunity to strengthen Martin Lundstedt, President and CEO. Scania’s sales of service-related products.8 O per atiO ns sca nia 2012
  11. 11. SCANIA ExECUTIVE BOARD Andrea Fuder, Executive Vice President, Head of Purchasing.Andrea Fuder Kent Conradson A premium brand requires the best Only with the best employees can Scaniasuppliers. Scania’s promise to customers deliver the best solutions. This requires Scania tomeans we need partners that can maintain be an attractive employer.”the highest quality, delivery precision,flexibility and competitiveness.” The primary task of Scania’s HR organisation is to supply our operations with the competencies andToday Scania has a strong supplier base, and we expertise they need. Today two thirds of our 38,600ensure delivery precision and cost-effectiveness by employees work outside of Sweden, and this propor-working as far as possible with at least two suppliers tion will increase. attracting new competencies in newfor each component. markets is one of our main challenges. We are constantly working to improve ourselves andour suppliers. The highest quality is a must if Scania isto meet the demands of its customers for reliability anduptime. close collaboration with our suppliers enables us todevelop new solutions together. as a global company,we must also find solutions to various legal require-ments, for example local content requirements for ourproducts. in emerging markets, principles related tohuman rights and corruption are also important, andScania supports the United nations Global compactinitiative on these issues. Scania’s own production network and those ofour suppliers must be highly flexible. Our suppliersneed to respond rapidly to upturns and downturnsin demand, while maintaining quality and delivery pre-cision. Quality and flexibility lead to higher productivity,which safeguards our long-term competitiveness. Kent Conradson, Executive Vice President, Head of Human Resources. O per atiO ns sca nia 2012 9
  12. 12. SCANIA ExECUTIVE BOARD Our core values and leadership philosophy, combined with the large responsibility assumed by individual employees in pursuing improvement efforts, are a very strong base on which to build further. Health and environment, along with safety, are of highest priority. We also use these strengths when we market and position Scania as the best employer. To strengthen follow-up and ensure that we are meas- uring the right things, we are imposing stricter demands on our reporting of sustainability-based key figures. Our employees should feel that Scania is a safe workplace, and here we should work preventively and strengthen training programmes for younger managers. Harald Ludanek The ambition of Scania’s research Per Hallberg, Executive Vice President, Head of Production and Logistics. and development operations is to develop products and services that meet customers’ high expectations for productivity and profit- ability. This includes low fuel consumption, Our company’s development engineers work increas- high uptime and low service costs combined ingly in the field, in close contact with the customer, to with high performance.” further increase our knowledge of operations. Scania is pursuing several projects in which a wireless Delivering quality is more than just a promise to our connection to the internet is opening the way to new customer. it is something that is embodied in the solutions. These projects include remote diagnostics day-to-day work of Scania’s engineers. Quality is also and “convoy driving” with extremely short distances the key to safeguarding Scania’s leading position. between vehicles in order to save fuel. Future as- Scania constantly strives to increase its knowledge sistance systems and new technology are being of its customers’ operating conditions and working developed in cooperation with universities, research methods in order to offer the right products and institutions and suppliers. services for each customer and each application. Per Hallberg When demand fluctuates in response to changes in the economic cycle, we must be able to swiftly adjust our vehicle production rate. Flexibility is crucial in order to ensure Scania’s long-term competitiveness.” Scania’s production flexibility consists of a number of elements: a high proportion of purchased compo- nents, flexible forms of employment, a common global production system and not least, continuous improve- ment efforts that have enabled us to boost production volume without increasing the number of employees to the same extent. The latter imposes strict demands on both manag- ers and employees. Employees who possess the right competency and the right tools, and who are involved in improvement efforts, enable Scania to achieve the Harald Ludanek, Executive Vice President, necessary increase in productivity. Questions related Head of Research and Development. to well-being, work environment, health and safety are10 O per atiO ns sca nia 2012
  13. 13. SCANIA ExECUTIVE BOARDthus high priorities. Regardless of what work they do,or in what part of the world Scania products are made,our goal is that employees feel job satisfaction and asense of well-being, involvement and motivation.We are continuing to invest in our existing productionunits in Europe and in latin america. in emerging mar-kets, including asia, we are building Regional Productcentres in order to get closer to customers and beable to make local product adaptations. During 2012,construction of such a new industrial facility begannear Bengaluru (Bangalore), india.Christian Levin In Scania’s dealership network we deliverScania’s products and services to customers.We have to keep each customer’s vehicle fleetrolling. Services are becoming increasingly Christian Levin, Executive Vice President,important for our brand, since customers need Head of Sales and Services.fast access to parts and repairs as well assupport services to lower fuel consumption.” functions and other administration, we can provide quicker support to customers.customers’ vehicles need service where they are This may include making it easier for our custom-located and not just where Scania happens to have a ers to take advantage of subsidised financing in latinservice workshop. This is why an expansion of mobile american markets. an effective customer credit checkworkshops is currently under way in a number of is facilitated by the fact that we have a local presencemarkets, so that Scania can perform repairs and main- and that at Group level we also have quick decision-tenance on site where the customer is. Everything that making processes and the right back-up for our localcan help the customer to increase uptime increases finance companies. We are also introducing a moreScania’s competitiveness, too. structured, systematic model for evaluating our cus- increased vehicle uptime is also a vital element tomers from a credit risk standpoint.of our internal improvement effort, which we call the Our stakeholders expect high quality in our report-Scania Retail System. We have seen how a systematic ing. it is not just a question of providing the tradition-approach can shorten lead times in service and main- al financial key figures. it is also important that wetenance, and we know that every hour that customers systematically follow up our policies when it comes tocan boost their productivity makes a big difference. human rights and corruption. This is important for future growth as well, sincewe will serve a substantially larger Scania vehiclepopulation as well as an increased proportion of body-work in the future.Jan Ytterberg To secure the confidence of all our targetgroups, it is important for us to be transparentabout the results of our work, not only finances.”The market situation is very uncertain and demand isat a low level in many regions, which means that wehave to prioritise the right things and adjust our level ofambition in the short term. Meanwhile, “customer first” Jan Ytterberg, Executive Vice President,applies. By streamlining processes in central support Chief Financial Officer (CFO). O per atiO ns sca nia 2012 11
  14. 14. SCANIA’S STRATEGY12 O per atiO ns sca nia 2012
  15. 15. SCANIA’S STRATEGYScania’s strategic platformScania’s objective is to provide the best profitability for its customers throughout the product life cycle by deliveringoptimised heavy trucks and buses, engines and services – thereby becoming the leading company in its industry.Scania’s operations are based on the company’s core values, its focus on working methods and dedicated employees.Core valuesScania’s core values permeate its entire corporate culture and influence its day-to-day work. Customer first, respectfor the individual and quality are closely linked and are applied as a unified concept. These core values are the pointof departure for all business development.Customer first Respect for the individual QualityThrough good knowledge of its custom- Respect for the individual means recognis- High profitability for the customer through-ers’ business operations and conditions, ing and utilising each employee’s knowl- out the product life cycle depends onScania delivers solutions that contribute edge, experience and ambition in order to delivery of high-quality solutions fromto customer profitability by means of high continuously improve and develop working Scania. Through good knowledge ofearning capacity and low operating costs, methods. inspiration and new ideas are customers’ needs, Scania can continuouslywhile promoting a sustainable environ- born out of day-to-day operations. This improve the quality of its products andment. The customer’s operations are at helps ensure higher quality, efficiency and services. Elimination of all forms of wastethe centre of the entire value chain: from job satisfaction. is the way Scania can ensure that allresearch and development via procure- deliveries meet the expectations ofment and production, to sales of vehicles, demanding customers. Deviations fromengines, services and financing. targets and standards are used as a valuable source of continuous improve- ment in Scania’s processes. O per atiO ns sca nia 2012 13
  16. 16. SCANIA’S STRATEGY14 O per atiO ns sca nia 2012
  17. 17. SCANIA’S STRATEGYDriving forces for demandWhat drives the demand for Scania’s products and services is economic growth. Meanwhile, there is mountingpressure to reduce emissions and achieve more efficient use of energy. Demand is also increasing for solutions,based on a holistic perspective, that can streamline logistics systems and thereby reduce transport costs.Economic growth is the main driver of demand for in the future, the transport sector will use alternative,transport services. Greater trade between countries renewable fuels to an ever greater extent to reduceand regions, demographic changes and urbanisa- carbon dioxide emissions.tion are leading to improved living standards, creating Transport companies, transport service buyers,a greater need for infrastructure, construction and legislators and society as a whole are driving this trend.consumption, thereby also boosting the demand for Various rules and regulations related to the environ-transport services. in rapidly growing cities in develop- ment and emissions have recently become moreing countries and in emerging economies around the important in determining what type of vehicles andworld, there is a considerable need for well-developed services are in demand. Emission standards, noisepassenger transport systems within and between restrictions, motorway charges and driver trainingcities. as societies evolve, they also increasingly requirements are influencing the need for investmentsdepend on reliable goods transport and on more to replace vehicles and the demand for various kindsefficient distribution of goods and waste management. of services.new, innovative and sustainable transport systems Driving forces behind demandmust be developed in order to solve problems relatedto congestion, emissions and noise. DRIVING FORCES OF DEMANDGreater demand for improved efficiency ■ Standards for ■ Economic growth reduced emissionsGrowing societies are increasing the pressure on, and IMPROVED (C0 2 ,nitrogen oxides, ■ Increased trade LOGISTICS particulates)boosting the prices of, already limited resources. Even ■ Urbanisation ■ Need for improvingtoday in many markets, fuel costs represent a signifi- energy efficiencycant proportion of the total operating cost for a haulier.Holistic perspective creates opportunities of players, which to varying degrees influence howDifferent conditions prevail in various industries that efficiently goods and passengers are transported.utilise transport services. However, one common fea- Vehicle manufacturers have traditionally concen-ture is that lower transport costs can have a significant trated on delivering vehicles to a transport company.impact on profitability. Examples of such industries are The potential to optimise the vehicle to its transportmining, forestry and retailing. logistics systems also task increases through a systematic working methodvary in complexity but usually encompass a number that includes close collaboration with and greater understanding of transport companies and buyers of transport services. The vehicle manufacturer can also BUYERS OF TRANSPORT influence transport costs through various services, for SERVICES example maintenance that is tailored to the transport task and driving conditions. a holistic view of theUnderstanding Focus on solutions logistics flow thus yields major advantages. The vehicle manufacturer can support the customer on the basis LOGISTICS SOLUTIONS of its knowledge about the transport task and boost its TRANSPORT SCANIA COMPANIES contribution to the value chain, enabling the vehicle to be utilised optimally to increase profitability and reduce Focus on solutions environmental impact. O per atiO ns sca nia 2012 15
  18. 18. SCANIA’S STRATEGY Profitable business through customised solutions As a leading player in its industry, Scania plays an important role by delivering profitable, sustainable solutions to the challenges and changes facing the transport industry. Scania aims to build long-term relationships with its customers and is dedicated to the customer’s business all the way – from specifying the best adapted vehicles to providing service and support in day-to-day transport work. Scania’s long-term competitiveness is entirely depend- product system, customers’ vehicles can be swiftly ent on its ability to deliver solutions to new conditions and effectively optimised as desired in order to suit the and customer needs that enable the transport industry transport task and live up to new environmental stand- to grow without increasing its carbon dioxide emis- ards. This lowers Scania’s research, development, sions and that make transport services cleaner, safer production and service costs. it leads to high quality and more flexible. competition is tough and will con- and longer production runs, which is cost-effective tinue to be so. Quality will be a key factor in Scania’s both for customers and for Scania. competitiveness. Quality is also one of Scania’s core values and is crucial to product reliability and customer Service offering more important profitability. Demands for lower transport costs and the need for high delivery precision by transport companies mean Optimised transport solutions are profitable that Scania’s service offering will become an increas- Scania’s overall strategy is to strengthen customer ingly important competitive advantage. profitability by delivering optimised transport solutions. Having a long-term relationship with a customer Scania works in close proximity to its customers so creates the conditions to work together on continu- that they can perform their transport tasks optimally, ous improvements. Examples of this are development both in economic and environmental terms. of new performance steps in the modular system Scania becomes an active partner, thereby helping and coaching of drivers so that they can continually eliminate waste in the value chain. improve their driving style. Modular system ensures the right product Defining exactly the right product, combined with the right services for the customer’s transport task, is fundamental to Scania’s operations and essential to customer profitability. By means of Scania’s modular kundens kostnader ENG CUSTOMER COSTS Administration 7 % Tyre 3 % Higher revenue Reduced costs Repair and – Right vehicle for Drivers 35 % – Low fuel consumption maintenance 9 % the right task – Driver training – High uptime Vehicles 11 % – Effective financing – Fast repairs – Long service life and – Driver appeal high resale value Fuel 35 % For a European haulier, about 70 percent of costs are related to drivers’ salaries and fuel. A company’s profitability thus largely depends on the driver, whose driving style affects fuel consumption.16 O per atiO ns sca nia 2012
  19. 19. SCANIA’S STRATEGYDemands for high uptime and reliability make Scania engines well suited in con- Mining transport services often involve moving large volumes of heavy materialstruction machinery such as stone crushers, wheel loaders and dumpers. Custom- under demanding conditions at the lowest possible cost. This requires strong,ers that use both trucks and construction machinery containing Scania engines can robust, reliable vehicles with high uptime and high payload capacity.improve the efficiency of their maintenance and repairs significantly.Low fuel consumption, high reliability and minimal maintenance requirements are In timber haulage, a holistic view is important in order to obtain the best overallcrucial to the profitability of bus and coach operators. Scania offers comprehen- economy throughout the transport chain. Vehicle utilisation, operating costssive solutions with customised service and repair agreements, including financing and access to servicing are important for the profitability of the haulier as wellsolutions in many cases. as the timber company.Uptime and fuel consumption are the most important factors for long-haul trans- In the case of fire engines, reliability and performance are absolutely crucial.port services. Scania’s extensive workshop network ensures high uptime. Drivers These vehicles should always be ready for a quick response when needed.are very important to operating economy, road safety and environmental impact. Scania’s crash-tested crew cab accommodates up to 6–8 people.Aside from driver training and personal coaching, Scania offers a number of on-board vehicle systems that help drivers do a good job. O per atiO ns sca nia 2012 17
  20. 20. SCANIA’S STRATEGY Low-entry Crew cab Long crew cab Trucks Scania’s modular system P-SerieS Scania’s modular product system has been built up Scania’s P-series featuring a Short cabs Day cabs Sleeper cabs low-mounted cab is mainly over several decades. It enables Scania to provide used for distribution and Short cabs Day cabs Low Sleeper cabs Normal Highline Topline Short cabs day cabs Sleeper cabs Short cabs Day cabs Sleeper cabs individual specifications for each customer with a construction haulage. The Low Normal Highline Topline P-series is also the base for Low Normal Highline Topline limited number of components in its product range. Scania’s low-entry and crewP The modular product system means that new cus- cabs. P tomer needs can quickly be met without expanding P the total number of parts used to build its vehicles g-SerieS Scania’s G-series is a versatile proportionately. G model featuring a spacious cab G for long-haulage and construction Standardisation of interfaces G haulage and with more power ful engines than the P-series. Modularisation is based on standardisation of the Low Normal Highline Topline interfaces – connection points – between compo- r-SerieS R When equipped with a V8 engine, nent series to ensure that they fit together in different R combinations. R the R-series provides the highest performance in long-haulage and other transport segments. These interfaces are designed in such a way that they do not change over time. This makes it possible to install new components that improve product per- formance without any need to change the surround- ing components. Buses and Coaches SCaNia CiTywide LF Same need, identical solution All Scania Citywide models are based on the same range of Customer needs may be the same as regards specific body modules. The low-floor components despite different applications, in which LF version is available with two axles or articulated. case Scania uses the principle “same need, identical solution”. A large percentage of the chassis compo- nents in a bus are shared with a truck. The shortest SCaNia CiTywide Le truck cab variant may be needed in order to maximise The low-entry LE version has cargo capacity both in light distribution service and in a low floor in the front section and can be specified in several a heavy tipper truck operating in a mine. A powerful, lengths with two or three axles high-torque engine may satisfy the need for maximum or articulated. tractive power in a demanding operation or for main- taining a uniform speed during long highway journeys. SCaNia OmNiexPreSS A highly flexible modular design offered with two or three axles Components based on performance needs and lengths in 10 cm steps from 11 to 15 metres, as well as in three Together with the customer, the Scania sales person optional heights. specifies components with the well-balanced per- formance steps. Examples of performance steps are different cab sizes, engine output steps, frame SCaNia TOuriNg strengths and number of axles. The truck and bus The modularised Scania Touring high-decker coach is available variants built are continuously evaluated, enabling with two or three axles. Scania to have the smallest possible number of parts and the largest possible selection of variants in its product portfolio. Scania Engines Scania’s industrial and marine engines are based entirely on the corresponding vehicle engines. All business areas benefit from common development work, which also includes auxiliary equipment such as engine management, cooling 9-litre 13-litre 16-litre systems, fuel injection and exhaust aftertreatment. 5 cylinders 6 cylinders V818 O per atiO ns sca nia 2012
  21. 21. SCANIA’S STRATEGYComponent modularisationThe wide range of choices available to customers is achieved through the design of the interfaces between different components.Each interface is very precisely defined to allow the greatest possible flexibility when components are combined into the correctperformance steps in the vehicle. Cabs doors and sidewalls Scania’s cabs are strongly modularised, with a common frame and Between the front and rear wall, which are the same in all cab series, common outer panels. Cabs are fitted at different heights to suit is the same door structure (different heights) and modularised side different applications. panels (different heights and lengths). The windscreen is the same on all cabs. A few door and sidewall variants cover the entire cab With three roof heights for the P- and G-series and four for the R- range. series, customers have ample opportunities to optimise space and comfort in the cab. P-series G-series R-series P-series g-series r-series axles gearboxes Driven, steered and live axles are part of Scania’s modularised With two main gearboxes in combination with range and splitter range, which is used in various combinations in 2- and 3-axle trucks units, Scania covers the need for haulage ranging from 16 tonnes and buses, as well as in 4- and 5-axle trucks, tandem bogies etc. to 200 tonnes gross train weight. Gearboxes are available with Some driven axles are available with hub reduction and can also be manual or automated gearchanging (Scania Opticruise) and can utilised as driven front axles. be ordered with an integrated Scania Retarder. Single-reduction axle axle with hub reduction Frames Frames are manufactured in several strength classes, the Scania Scania most rugged with an inner frame to handle extra heavy loads. Opticruise retarder engines Scania’s engine range is based on three engine series featuring five, six or eight cylinders, with the cylinder and related components sharing a common design. This means that engine development work can focus on optimising the combustion in one cylinder, which is used in all engines. The basic design of these engines is very similar and they 9-litre 13-litre 16-litre 5 cylinders 6 cylinders V8 share many parts and components, radically reducing the number of unique parts that are included. many engine components are common to the entire engine range, regardless of the number of cylinders. o per atio ns sca nia 2012 19
  22. 22. SCANIA’S STRATEGY Services support the customer’s business Through its extensive workshop network and cus- located along transport routes and near logistics tomised service-related products, Scania can provide centres with the aim of ensuring high uptime. Through support to the customer and perform servicing at the continual advice as well as regular and professional right time and in the right place. Service operations service from Scania, customers can optimise vehicle also contribute to the stability of Scania’s profitability, uptime. Maintenance and repairs are offered round- since service sales are much less sensitive to economic the-clock in many places around the world. cycles than vehicle sales. Scania also offers mobile workshops to meet ser vicing needs at the customer site and also field uptime most important to the customer workshops which are integrated in the customer’s Every minute of unplanned vehicle downtime means operations, for instance at mines or bus depots. lower productivity for the customer. High uptime is also Scania Assistance offers maintenance and repairs important for industrial and marine engines. Shorter 24 hours a day, every day of the year, throughout repair times and a greater ability to quickly service the Europe and in many other markets. customer’s entire rig, not just the parts of the truck manufactured by Scania, has great importance in Focus on quality and continuous allowing the customer to achieve maximum operating improvements time and low costs. The strengths of Scania workshops include their highly Scania’s service workshops are one of the most trained service technicians and immediate access to important points of contact with customers. Proximity parts. To ensure that all customers receive the same to customers is vital. Scania’s service network consists high degree of service, Scania certifies the quality of its of more than 1,600 service workshops, of which some service network by means of the Scania Dealer Operat- 1,000 are in Europe. One third of the network is owned ing Standard. This is based on a number of customer by Scania. The service workshops are strategically pledges that must be met in order for a service point20 O per atiO ns sca nia 2012
  23. 23. SCANIA’S STRATEGYto be authorised by Scania. A vehicle that has been Financing and insurance a key elementcontinuously serviced by a Scania workshop also has a One important element of Scania’s comprehensivehigher resale value. A fixed-price service contract from customer solutions is the possibility to finance vehi-the day a vehicle goes into operation makes it easier for cles effectively on good terms. Scania conducts itscustomers to set the prices of transport assignments. own financing operations in 50 countries. Working methods and ways of thinking borrowed Scania Insurance offers the customer a pack-from the well-known Scania Production System are age price that includes comprehensive insuranceapplied in the sales and service operations in order coverage, an efficient claims management serviceto add customer value and boost efficiency. Through and rapid repairs, with access to Scania’s servicecontinuous improvements in the service organisation, network.servicing and repairs are carried out more efficiently. Connected vehicles provide high uptime Many Scania vehicles have an on-board communicator. This facilitates, among other things, follow-up in fuel consumption. The data can be used as input in driver coaching and to further optimise the specification of the vehicle. It also facilitates identification of preventive actions and performance of quick repairs. Scania driver training Scania has an extensive workshop network and can therefore provide support to the customer and perform and driver coaching servicing at the right time and in the right place. Service Scania Fleet Management workshops are strategically located along transport routes and near logistics centres with the aim of ensuring high Scania uptime. Connected vehicles enable more flexible, efficient planning of servicing. Communicator Scania Assistance offers roadside maintenance and repair service 24 hours a day, every day of the year all over Europe and in many other markets. Scania Assistance allows customers in some 50 countries to maintain con- tinuous contact with Scania in their own language via 17 assistance centres, summon help to start or repair a vehicle on the road, contact a workshop or have a vehicle towed. o per atio ns sca nia 2012 21
  24. 24. SCANIA’S STRATEGY The world’s tallest concrete pump Zoomlion, a Chinese-based construction machinery manufacturer, has been a Scania customer since 2008. Zoomlion’s concrete pumps are mainly used in construction of high-rise buildings and bridges. Scania chassis are customised to facilitate and streamline the mounting of Zoomlion’s superstructures. Chassis from Södertälje, Sweden In recent years, the giants of the world concrete pump industry have outdone each other time and time again, by building taller and taller pumps. Scania was commissioned by Zoom- lion to provide a truck for a pump that would be the first to exceed 100 metres in height. The solution was a 7-axle chassis from Scania in Södertälje, Sweden, supplemented by the Swedish company Laxå Special Vehicles. The engine is a 620 hp Scania V8. The complicated superstructure was developed by Zoomlion and its Italian subsidiary Cifa. New world record This very special vehicle has been recognised by the Guinness Book of Records. The mounted pump is the world’s tallest concrete pump, with a reach of 101 metres. The 15.5-metre chassis is probably the longest ever built by Scania. The total length of the vehicle is 18.5 metres. Scania was chosen due to its modular product system, which can customise standard The vehicle complies with the maximum and much cheaper for the customer to use components in order to build a chassis that is dimensions and weight requirements Scania than to produce a specially built not part of the regular product range. for road transport. Thus it was quicker chassis. New city buses to Santiago, Chile Launched in 2007, the Transantiago inte- Comprehensive package of services grated public transport system connects To ensure high uptime for the customer, the entire city bus fleet of the Chilean Scania will deliver a comprehensive package capital and more than 100 kilometres of of services including driver training, repairs the metro network. and maintenance. The vehicles were financed The system has now been supple- by Scania’s Chilean customer financing com- mented with 231 city buses from Scania. pany. Scania’s two-axle buses are equipped The buses went into service during the with 230 hp engines that meet the EU’s Euro autumn of 2012 and are operated by 5 emission standard and the even stricter Alsacia Express, which has extensive EEV standard. The bodywork was supplied experience from similar transport systems by Brazilian bus bodybuilder Marcopolo. in several Latin American countries.22 O per atiO ns sca nia 2012
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