Volvo Cars: record sales but decreased profitability
Volvo’s turnover for the second quarter of 2019 was 67,1 billion Swedish Crowns, a 1,7% increase compared to Q2 2018. The company sold 179.506 cars (+5,4%), a sales result it has never had before in a single quarter. Volvo has grown in all of its markets. In Europe (+3,5%), the US (+1,9%), but especially in China (+15,7%). China is Volvo’s biggest country in sales.
Meanwhile, Volvo’s EBIT margin is down to 38,5% at 2,6 billion. Car prices are under pressure, as new car registrations in Europa and China are declining. Volvo Cars says trade tariffs also put margins under pressure.
Volvo is booming
Last year, Volvo Cars managed a new sales record of more than 600.000 cars, but profits eroded because of trade wars between the US and other regions like China and the EU. Volvo has shifted production to minimize the impact.
When it was acquired by Geely from Ford, Volvo Cars started a spectacular recovery of its finances and brand image. It has, among others, targeted autonomous vehicle development, in which it is now one of the most evolved manufactures.
Volvo has announced cost-saving measures, cutting 750 jobs and limit the use of external services. It hopes to realize a recurrent saving of one billion Swedish Crowns starting in the second semester of 2019. “Additional cost-saving measures will reduce costs by an additional million from 2020,” says Volvo CEO Håkan Samuelsson.
In 2017, Volvo announced it would only launch new models with electric or hybrid powertrains from 2019. It promised the ‘historic end’ of vehicles only equipped with combustion engines. Volvo was the first big car manufacturer to start electrifying its entire line-up and to define a strategy to abandon internal combustion-engined cars progressively.