A time for courage
2020 has been a year like no other. During the pandemic we rose to adversity and never lost sight of our purpose to drive the shift towards a sustainable transport system.
In a year dominated by a devastating pandemic that has shaken the whole world, we fought hard and rose to the challenge. Throughout 2020 I saw amazing courage and initiatives within our organisation. I feel proud of the way that the company pulled together to respond to the crisis so quickly. It is a testament to who we are: a big company with a family spirit.
If not before, the pandemic has made it evident that transport really is the lifeblood of a functioning society. As the first wave of lockdowns began to take hold, our priority was to keep our customers on the road, and help ensure that critical supplies of medicine, equipment and food could get to hospitals and stores. The people at Scania have also shown incredible commitment to helping out society in many different ways.
Naturally, another priority was to manage the operational and financial impacts to our own business. Here we were helped by support packages in different countries, and we were able to keep a large part of our workforce furloughed during the most financially challenging time. However, the severity of the situation also led to the painful decision to decrease our workforce significantly.
"Our climate targets are now deeply embedded in daily decisions we make across the company. They are fundamental to our strategy and part of our corporate targets. They are our North Star – a guide that shows us clearly the direction we want to take."
President and CEO, Scania
A large part of our operation was put on hold during the initial several months of the pandemic. However, a few areas, like sustainable solutions and electrification, continued to move forward at a high pace, accelerating the transformation of our company. The digitalisation of our business has increased significantly during the pandemic, including in customer interaction, which is reflected in the increased share of digital sales.
Despite the extraordinary challenges of 2020, we moved into 2021 in better shape than ever to take on the future. We emerged from the year with our yellow leader’s jersey still on and the aim set to lead the shift towards sustainable transport.
The beginning of a new era
2020 was also significant for Scania in that it marked the closing of a strategy that was put in place to increase our focus on growth. Looking at our increasing market share, sales volume and service penetration, it is clear we have made excellent progress. The introduction of digitalisation and sustainability was also a notable focus. This has laid the foundation we can now leverage, as we shift focus to the future and a new strategy era.
We are in a period of transformative change – a time when the industry will experience some of the greatest shifts in its history. As electrification and autonomous technology disrupts our industry, exciting new business opportunities are emerging. We will reshape our business model in close cooperation with current and new customers to explore these opportunities and use them to drive growth. One key priority going forward is to move away from developing products and services to developing solutions.
As always, our success, depends first and foremost on our people. Ensuring a broad diversity of talent and perspectives, and fully harnessing the competence and experience of every individual in our business, is becoming increasingly important. In the transformation, we have reached the milestone where more of our engineers work in software development than in hardware design. We have also been able to attract some of the very best talent globally, for example in the areas of electrification and autonomous solutions. To me this is proof of what an exciting time it is to work in the transport industry.
The team and the focus gives me confidence for the future. My hope is for Scania to become the worldwide reference not just for how to transform a company, but an entire industry.
In May 2020, we became the world’s first heavy commercial vehicle manufacturer to have climate targets formally approved by the Science Based Targets initiative. The targets include halving carbon emissions from our own operations from 2015 to 2025 as well as reaching a 20 percent reduction of CO2 emissions from our trucks and buses when in use.
The latter constitutes more than 90 percent of Scania’s environmental impact. We will get there by working closely with our customers, focusing on energy efficiency in the conventional powertrain, increasing the share of biofuels which has an immediate as well as a retroactive effect on the rolling fleet of vehicles, and we will ramp up the volumes of electric vehicles.
Our climate targets are now deeply embedded in daily decisions we make across the company. They are fundamental to our strategy and part of our corporate targets. They are our North Star – a guide that shows us clearly the direction we want to take.
The year saw us achieve a milestone in our electrification journey with the commercial launch of our first series-produced electric truck range, which will play an important role in our ongoing efforts to decarbonise our portfolio. To prepare for bigger sales volumes of electric vehicles, we have made significant investments in the battery space, including a battery assembly plant, a battery lab and in our partnership with Northvolt.
In 2020 we also took the historic decision to invest in our own industrial operation in China. This opportunity to purchase a company with manufacturing rights in China is unique, as historically foreign companies have mainly operated in China through joint ventures with local manufacturers. Apart from being the world’s single largest market for commercial vehicles, China is in the forefront regarding technology and our presence will provide increased access to leading expertise in areas such as electrified and autonomous vehicles. Scania’s strategy in China is the same as everywhere else; to focus on sustainable transport and we will be able to contribute with our expertise – efficiency and sustainability in the transport system.
Alliances for change
To reach a sustainable transport system, brave decisions, huge investments and political will is required. Initiatives such as the European Green Deal are paving the way for the transition to a low-carbon economy, with sustainable transport a key part of the agenda. Nationally, we also need to make sure that we are not slowed down by long decision processes.
In the investor community, there has been a remarkable shift towards prioritising sustainability and factoring in climate change into investment decisions. This is very positive and we see it not the least in the large interest in our green bonds, issued in September.
Business also has to step up and drive change. This year we have seen an important step taken in our own industry. In an unprecedented commitment, the truck makers that are part of the European industry association for commercial vehicles ACEA, all pledged to stop selling vehicles that run on fossil fuels by 2040. The commitment is aligned with the Paris Agreement and anchored in science with the help of the Potsdam Institute for Climate Impact Research. To me it is a sign that competitors are coming together to drive a joint agenda for the good of the planet.
Another such example is the CEO Alliance that Scania is part of. We have joined forces with CEOs from 11 other European companies, representing a broad range of sectors, to drive change towards a zero-carbon future and a more resilient Europe.
Through these initiatives we can use our platform, forge powerful alliances, raise our collective voices and influence decision-making, advocating for the changes we need to see to make sustainable transport a reality.
It’s up to us
Over the past several years, we’ve been lucky in that our business environment has remained fairly stable. Now our world has become a lot more unpredictable and ahead of us we are looking at huge, transformative leaps. To navigate this new world, we need to be ready to explore new ways of working, and new ways of creating value for our customers.
The good news is that we already have most of the elements we need to succeed. We have the right technology, a powerful brand, closeness to customers and amazing people in the Scania family. And we have early on put a stake in the ground with a clear purpose which has developed into a fantastic business asset.
Our response to 2020 showed Scania has what it takes. We were quick to adapt, while staying true to our values. The whole team showed courage, and that saw us through a challenging year. I have had a fantastic journey at Scania and I feel proud of what we have achieved. My journey will continue with a new company, but I know the team at Scania will continue to drive the shift, changing the world for the better. All the building blocks are in place and the Scania family will make it happen!
President and CEO, Scania