Volvo Records Strong Profits in Second Quarter Despite Concerns for Year-End Slowdown
Volvo reported strong financial figures for the second quarter of the year, with a significant profit. From April to June, the Swedish automaker recorded a profit of 8.2 billion crowns, which is over 700 million euros.
This represents a 28% increase compared to the second quarter of 2023. Including its associates and joint ventures, the profit is just below 700 million. However, in this case, the growth compared to 2023 is 60%.
The company saw a 15% increase in sales, with a total of 205,400 vehicles sold in three months. Sales of electrified vehicles (plug-in hybrids and electric cars) rose by 43%.
In total, vehicles powered by these two types of engines accounted for 48% of sales. Volvo boasts selling 26% of fully electric vehicles during this period.
Jim Rowan, CEO of Volvo Cars, praised the “record profitability” and commended the company’s results in “a complex geopolitical and economic environment.”
“Throughout the year, we have increased our market share in Europe to the highest level ever. We have also increased our market share in the United States while managing our position in the Chinese market. I am pleased that we have achieved this by applying pricing discipline.”
Why Volvo is Exercising Caution for 2024?
However, Volvo faces challenges ahead due to European regulations on Chinese cars. The EX30, Volvo’s third best-selling electric SUV in Europe, originates from China.
It is essentially a clone of Geely’s electric SUV, manufactured in China. Next year, Volvo will start producing the EX30 in Belgium to avoid these tariffs.
But until then, the SUV comes from the Middle Kingdom, resulting in penalties to come. Europe is yet to decide on the taxes to be imposed on Chinese cars.
Some brands could see their prices increase by up to 30% because of this. The goal of the European Union is to offset the subsidies received by Chinese brands.
By doing so, they prevent unbeatable competitors from entering the market. However, this protectionism, in some cases, also affects European brands.
That’s why Volvo is exercising caution for the year-end. To avoid disappointment in the market, the company has reduced its sales forecast by 12 to 15% for the end of 2024. “It’s really driven by taxes,” concluded Jim Rowan.