Volvo Cars had another record year but remains prudent about 2025

Volvo Cars had a second consecutive record-breaking year in 2024 and reports the highest full-year retail sales, revenues and core operating profit in its 98-year history. However, the company anticipates a turbulent 2025 due to challenging market conditions.

Full-year revenues exceeded SEK 400 billion (€35.2 billion) for the first time in the company’s history due to a new all-time sales record of 763,389 cars. Its full-year core operating profit of SEK 27 billion (€2.376 billion), excluding joint ventures and associates, was another record, up 6% compared to 2023. The core operating margin was 6.8%, up from 6.4% in 2023.

The group’s operating income in the fourth quarter was affected by a SEK 1.7 bn (€150 million) write-down related to assets in the Novo joint venture before the company took complete financial control of Novo from an accounting perspective. Volvo took over the shares of Northvolt in Novo Energy because Nortvolt didn’t fulfill its financial obligations.

A year in two halves

Gross margins for the fourth quarter were 17.1%, impacted by a one-time effect from the sale of on-balance sheet cars. This increased revenue and cost of sales and lowered the Q4 gross margin.

Volvo Cars also saw a considerably more significant decrease in inventory during Q4 compared to the previous year, which further impacted gross margins. Margins were also affected by car line and sales channel mix and pricing pressure in the market, but this was partially offset by a more efficient cost structure for new car sales.

The company’s cash flow improved considerably in the latter part of the year. Thanks to diligent and disciplined cash management, full-year free cash flow was positive at SEK 1.1 billion (€97 million).

“2024 was a year of two halves,” said Jim Rowan, CEO of Volvo Cars. “For the first six months, we recorded strong double-digit volume growth. But like the rest of the industry, we experienced a more challenging second half.”

“Demand slowed down, impacting both our sales pace and underlying profitability. Nevertheless, we can look back at 2024 with a sense of achievement in several areas and are positioned well to achieve our long-term ambitions,” he added.

Meeting EU CO2 targets

The company sold 175,194 fully electric cars in 2024, an increase of 54% versus 2023 and representing 23% of its total global sales volume, the highest share among all legacy premium carmakers. Sales of fully electric and plug-in hybrid models amounted to 46% of all Volvo cars sold in 2024.

This strong performance enabled Volvo Cars to exceed the EU’s CO2 targets for the company, giving it a surplus of EU carbon credits in 2025.

Looking ahead to 2025

“While the company expects the market to remain weak in 2025 due to a multitude of competitive and geopolitical challenges, Volvo Cars is coming into 2025 in a solid position with strong liquidity, backed by two record years of sales and profits,” says the press release.

Volvo Cars will continue to invest in and strengthen its diversified and balanced product line-up. Five new or refreshed versions of existing models will be available in 2025. The company expects these cars to help partly mitigate the challenging market conditions in 2025.

The company anticipates that 2025 will be a challenging and transition year on the path to its long-term growth ambitions. The company does not expect the market to grow at the rate of previous years, coupled with a highly likely increase in discounts across the industry due to increased competition.

“2025 will be a year of transition,” explained Jim Rowan. “The global car industry faces several uncertainties: cyclical, structural, transformational, and geopolitical. We have navigated this environment better and faster than many of our peers, but we and the rest of the industry will be severely tested this year.”

“At the same time, we must keep our eyes firmly on the road ahead and not sacrifice the future on the altar of the present. In other words, we must be prudent, diligent, and disciplined during a turbulent 2025 while paving the way for our long-term ambitions.”

January sales down 5%

Volvo Cars reported global sales of 50,820  cars in January, down 5% compared to last year. The company’s sales of electrified models (BEVs and PHEVs) grew 17% compared to January 2024 and accounted for 44% of all cars sold during January. The share of fully electric cars was 19% of all cars last month.

The XC60 remained the top-selling model in January, even increasing sales (18,972 units against 18,011). The second-best was the XC40/EX40, and the third was the XC90, but both models saw decreased sales. The first shrank from 12,628 in January 2024 to 8,736 cars, the latter from 8,167 to 7,473 cars.