Volvo SWOT AND PESTLE Analysis

Strength

1. Renowned name with strong brand equity: Volvo since its inception has been at the forefront of designing their vehicles in such a manner that in the case of an accident or any unforeseen circumstances the passengers riding in the vehicle stay safe. Taking the safety concerns a step further the company has developed a system wherein Volvo trucks, bus and cars will be sharing real time data through their cloud-based service “Connected Safety”, the system intends to work in such a manner that it will alert the driver of the vehicle about potentially hazardous road conditions or slowdowns.
As the technology undergoes further more refinement and more vehicles are linked with such system in the future it has the potential to increase the road safety of the passengers. This technology is already at work in Volvo’s traditional markets such as Sweden, the Netherlands and Norway, so as to implement it on a bigger scale the company is in talks with other government agencies to introduce this feature in other countries as well. Such systems as developed by Volvo are also being currently tested by other rival companies such as Volkswagen and Toyota.

2. Global market leader in luxury bus segment: Volvo buses have crafted a path for themselves in the marker by being synonymous and closely associated to providing a luxurious experience for the commuters, Volvo buses in many areas have revolutionized road travel for commuters. Volvo manufactures two types of buses that are meant for city travel and those meant for long distance coaches and both the segments have been vastly successful in countries like India which are highly price sensitive markets but the passengers are willing to pay more because of superior service and quality of commute and safety offered than compared to its competitors. In India, more than a million passengers commute daily in a Volvo bus and operate in more than 35 Indian cities and through their Indian subsidiary Volvo Eicher Commercial Vehicles, Volvo group have been highly successful as the company have secured orders for supplying new buses to several state transport departments.

3. Diverse brands and product and services portfolio: Volvo group consists a total of 8 brands namely Volvo, Volvo Penta, UD Trucks, Terex Trucks, Renault Trucks, Prevost, Nova Bus and Mack Trucks, the operations of the Volvo group range from manufacturing vehicles meant for commute, logistics, construction, mining, quarrying, urban distribution services for providing long haul transportation. Of the total revenue of $39.75 Billion earned by the Volvo group in 2017 more than 66% of the revenue was from the truck business followed by the construction equipment and buses contributing 20% and 8% to the total revenue respectively. Also, Volvo is the second largest truck maker all over the world coming second only to their German rivals Daimler-AG. Services also contribute majorly to Volvos’ revenues accounting for 21% of Group net sales in 2017. The service portfolio comprises of insurance, rental services, spare parts, preventive maintenance, service agreements, assistance services and IT services.

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Weakness

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Opportunity

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Threat

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Political

1. Increase in infrastructure spending in emerging markets will help boost commercial vehicle sales: Developing and emerging markets such as China and India are seeing a surge in government spending in infrastructure. With the massive urbanization, China will face huge transport pressure in the future and the government is willing to spend on new automobile technologies. China has become the second largest market for Volvo as of 2018 and also the first foreign market which has a presence of all the Volvo’s business segments. In India, Commercial vehicle manufacturers such as Volvo-Eicher Commercial Vehicles Ltd, Tata Motors and Ashok Leyland are set to witness a surge in demand because of a slew of infrastructure projects that the Government of India has decided to build as a part of its infrastructure revamp process for which the Government of India is willing to shell out more than Rs 5.97 trillion ($87 Billion) in 2018-19 which is a sharp growth of 21% than what the Government spent in 2017-18. Because of such high spending the truck makers are predicting a sharp rise in the demand for their products used for mining, transportation and road construction purposes. To cope up with the sudden surge in demand many truck makers such as Volvo are opting to go for capacity expansion by setting up new manufacturing facilities.

2. Government authorities promoting use of public transportation: In several developed and developing countries the occupancy rates for ridership has been very low since they were introduced to the public mostly because of the rise in income level the general public until now were in the favor of owning a personal vehicle but this trend has started to change as more people are now opting to commute through public transport as governments around the world are incentivizing commuters to use public transportation by providing subsidy resulting in cost friendly commute. To add up to this government of many countries such as India are in discussion to levy higher tax on petrol and diesel so as to discourage the usage of the conventional fuel and to opt for public transportation or personal electric vehicle. Also, government bodies have started to give targets to state road authorities to introduce electric buses in their fleet and improving the ridership. This bodes well for Volvo, which has a strong presence in electric vehicle segment.

Economical

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Social

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Technological

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Legal

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Environmental

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