For the third quarter of 2022, Volvo cars reported an operating profit of 3,5 billion Swedish crowns (some €320 million) and a profit margin of 4,4%. Unfortunately, it means that profits decreased by 71%. But In Göteborg, they are confident that despite multiple headwinds, things will improve because demand continues to be robust.
“Macroeconomic uncertainties around the world weighed on our third quarter performance,” said Jim Rowan, Volvo Cars CEO. “But with a nimble and agile organization, strong financial position, and ample liquidity, we are confident we will tide over the ongoing challenges.”
Turnover is up, and sales are down
While sales volumes fell by 8% during the third quarter versus the same period last year, revenues increased by 30% during the same period. “This illustrates the strength of the Volvo brand and underscores the company’s pricing power and the robust demand for its SUVs, especially the Recharge line-up,” the press release stressed.
The sales of new cars receded in Europe (-14%) and the US (-32%). However, the market in China is picking up again, and Volvo points to the robust demand to stay confident for the future. For the second half of the year, Volvo Cars expects production, wholesale and retail growth compared to last year.
For the full year 2022, the company expects slightly lower wholesale volumes than in 2021, assuming no further significant supply chain disturbances exist. Wholesale and retail volumes will be on similar levels.
“Manufacturing output continued to improve in the third quarter. However, unforeseen factors such as power outages and Covid-19-related lockdowns in China slowed down the pace of normalization Volvo Cars was anticipating,” said the official press release. “Provided no major supply chain disturbances exist, the company expects the improved production run rate to continue into the fourth quarter and into 2023.”
Electrification is on its way
Demand for premium electrified cars went up again. Sales of fully electric Volvo cars rose 87% during the third quarter, compared to Q3 of 2021, making up 7% of total sales.
September, in particular, was a strong month, when Volvo Cars sold over 6 000 fully electric models, representing over 12% of overall sales, compared with a share of 3,5% in the same month last year.
For 2022, the company expects the share of its fully electric cars to be tracking toward a double-digit share, as previously communicated. “We are on an exciting path to transform our company toward becoming a fully electric car brand by the end of this decade and reach climate neutrality by 2040,” Jim Rowan added. “We remain focused on that strategic direction.”