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CEO statement

2023 was an eventful year for Scania. During the year we continued to deliver customer value and made good progress getting our vehicle order to delivery flows back on track.

We delivered a strong financial performance with sales and earnings at record levels. At the same time we continued transforming our business in many areas, and pushing ahead with transitioning our portfolio to battery electric vehicles.

Market performance and product highlights

The year brought a mixed picture for our markets. While demand slowed slightly in Europe from very high levels, some of our Latin American markets came back strongly, mainly driven by a replacement demand in Brazil and Mexico. Meanwhile our service business continued to grow strongly.

The success of Super, our latest and most fuel-efficient combustion engine powertrain, continued to drive increased market share for Scania in 2023, receiving great feedback from customers as well as widespread industry acclaim. In 2023, a Scania truck equipped with a Super powertrain was awarded the coveted European Truck Award after a rigorous comparative test for fuel consumption, in which it beat the closest competition by a significant margin.

 

In terms of our order to delivery flows, we are still facing some challenges, though the situation improved considerably in 2023. We had a good order intake and increased our production accordingly. However, although we made great progress in stabilising our delivery flows deliveries still did not match our production output, negatively influenced by outbound transport restrictions, which led to increased lead times for customers. At Scania, customer satisfaction is at the heart of our business, and we are dedicated to resolving these issues to ensure we improve our delivery precision and reduce our lead times.

“By 2030, all deliveries of batteries, steel, aluminium and cast iron for our European operations will have to come with a minimised carbon footprint.”

Christian Levin

President and CEO, Scania and TRATON GROUP

Electrification and sustainability milestones

In 2023 we also made significant progress in our electrification journey. Milestones included opening our own battery assembly plant in Södertälje, completely rearranging our production line for large-scale production of electric trucks, and building a new test track for electrified and autonomous vehicles. Together, these measures will rapidly accelerate our transition to battery electric vehicles, and I am extremely proud of all our colleagues who put their hearts and minds into making it happen.

 

However, every big transformation comes with challenges, and despite the progress we made in 2023, our electrification ramp-up is not yet happening at the pace we would like to see. Aside from transitioning to a completely new technology, many other elements need to be in place to scale electric heavy vehicles at significant volume. The customer needs a financially sound business case, the infrastructure has to be there and the supply base must also be ready. Progress is not happening fast enough in many of these areas. We have also had some issues with our supply of batteries, and we are working in close partnership with our supplier to solve these problems.

 

During the year we also invested in our electric product portfolio, and began to produce our new generation of battery electric vehicles. We now have a broad portfolio of heavy-duty electric vehicles suitable for almost any customer or commercial application, and the portfolio is constantly expanding.

Of course, in an electrified transport system, vehicles are just one part of the solution. Customers are looking for complete e-mobility solutions, and we continued to invest in this area, developing the smart solutions, services and high-performance charging infrastructure that electric transport depends on.

 

In May, we saw the first successful tests of our pilot megawatt charging system – a project we have been working on with ABB E-mobility. The results are exciting, as the system promises to halve standard charging times for electric heavy vehicles.

Decarbonising our value chain

When transport is fully electric, the greatest proportion of a vehicle’s total CO2 emissions shifts from the use phase to the production and supply chain phase – and in particular, the manufacturing of materials such as steel. In 2023, we took a huge step forward in reducing these emissions by turning our supply chain decarbonisation targets into mandatory sourcing requirements. By 2030, all deliveries of batteries, steel, aluminium and cast iron for our European operations will have to come with a minimised carbon footprint. We announced these new supply chain requirements at COP28, and the response was truly positive. At Scania we aim to be a first mover in driving the shift and inspiring others to follow our example.

Science-based targets: challenges and progress

The challenges we have faced in our transition to a sustainable transport system highlight the fact that decarbonisation is a complex challenge that needs to be approached from many angles. This is reflected in our progress against our science-based targets (SBTs).

Back in 2020, we set ourselves extremely ambitious targets to decarbonise our business. To focus minds, we also made them short-term targets, setting a target horizon of 2025. This has been highly effective in creating accountability for decarbonisation at every level of our business, and we are well underway to reaching our scope 1 and 2 targets. However, in order not to fall behind on our scope 3 target, we need to step up our efforts in all possible dimensions. Along with ramping up production of battery electric vehicles, there are many other vital measures we can take to drive down carbon emissions by improving fuel efficiency: for example, through driver training, vehicle optimisation, and the increased use of renewable fuels.

 

As we approach the final year of our SBT timeframe, we should recognise that 2025 is far from the end of our decarbonisation journey, but rather an important milestone and a time for evaluation as we continue to drive the shift towards a sustainable transport system.

Our strategy and TRATON GROUP

2023 also saw some important strategic developments that will put us in an even stronger position to drive the shift, together with our customers. We clarified our strategic direction over the mid-term, setting out our key business priorities over a five-to-10-year period. To set clear expectations and measure progress we introduced six targets, linked to our high-level corporate objectives.

 

In line with these strategic priorities, we made some operational changes in 2023. These included restructuring our bus business, and as one of the measures to achieve a leaner structure that improves speed and flexibility, we decided to discontinue the bus body production in Słupsk. By leveraging our strengths such as modularisation and our close partnership with bodybuilders, we will be able to further strengthen customer value.

 

We continued to invest in ventures and new business opportunities outside our current core. One example was our joint venture with JUNA, which is introducing an innovative, customer-oriented pay-per-use model for electric trucks.

Part of our strategy focuses on our global presence, and in line with this we also continued the development of our industrial arm in China – our largest investment in our industrial operations since our move into Latin America in the 1960s. Our factory in China is starting to take shape, and 1,000 Scania colleagues are now working in China, with more to come.

 

In 2023 the pace of TRATON GROUP’s transformation accelerated rapidly, and this also brought changes to Scania. Some of our key business functions are now group-wide functions, one example being Scania’s Financial Services which now serve as the backbone for the Group through TRATON Financial Services. Scania has been a driving force in shaping the transformation of TRATON, with the Group using Scania’s core values, and modular system as a foundation while complementing this with the strengths of the other brands in the family.

 

A tight TRATON integration is an important pillar of our strategy, as it secures the investment capacity, speed and agility we need to develop a complete electrified and digitalised product portfolio for our customers. It is also important to stress that closer integration will mainly be seen in the industrial side of our business – the customer-facing business will continue to be unique to each brand.

Staying true to the Scania Way

With change all around us, it is reassuring to know that one thing stays constant: the Scania Way. I see it everywhere as I travel and meet different parts of the Scania organisation, and I am proud of how we have put our value system to work in everything we do. These principles are what make us unique, and what our customers truly value. As we continue to navigate our business and our customers through a rapidly transforming world, staying true to our Scania Way matters more than ever.

Christian Levin

President and CEO, Scania and TRATON GROUP

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