Volvo Cars’ earnings slip on tougher US, China competition

[STOCKHOLM] Volvo Cars’ earnings declined in the first quarter, as the Sweden-based carmaker grappled with waning electric-vehicle sales in the US and rising competition in China.

The carmaker, controlled by China’s Geely, posted an earnings before interest and tax margin of 2.2 per cent, down slightly from the year before. Revenue dropped after its retail unit sales fell, Volvo said on Wednesday (Apr 29).

The manufacturer is betting on its new EX60 electric SUV to help drive a recovery. Unveiled in January, the model has experienced strong early demand in Europe, prompting the carmaker to ramp up production at its Torslanda plant in Sweden.

Rising fuel prices due to the conflict in the Middle East may hasten the shift to EVs, CEO Hakan Samuelsson said in an interview.

While business is solid in Europe, the removal of EV subsidies in the US has hurt Volvo’s sales there. In China, it is experiencing tough competition from new models and on pricing.

“The second half (of the year) will be better,” the CEO added. The company reiterated its full-year target of “clearly better” cash flow.

SEE ALSO

BYD’s quarterly profit slides fastest in six years as China sales falter

Toyota suppliers start to see shortages due to Iran conflict

Mercedes reports narrower-than-forecast profit slump in first quarter

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Volvo is ready to help parent Geely build cars in Europe by giving it access to its factories in the region, he said. “If they want to be strong participants (in) the market here, (they) need to have local production,” he noted.

Since his return as CEO last year, Samuelsson embarked on a restructuring that included slashing thousands of jobs.

With production in China, the company had to navigate European Union import levies on EVs made in the Asian country. The challenges prompted Volvo to shift output to factories in South Carolina and Belgium. BLOOMBERG