Volvo Cars today reports its financial results for the first half of 2020, which were impacted by the coronavirus pandemic and its effect on the global economy.
Volvo Cars expects its business to recover in the second half of the year, as car markets are normalise.
The company recorded an operating result of -989 million SEK over the first six months of 2020, as revenue fell by 14.1 percent to 111.8 billion SEK.
While sales fell in absolute numbers during the first half, Volvo Cars took market share in China, the US and Europe, where Germany was among the strongest performing markets. It also saw a strong increase, of 79.8 percent, in demand for its chargeable plug-in hybrid models sold under the Volvo Recharge brand, while it experienced a strong growth in consumer interest in its online sales channels as well.
The company returned to sales growth in China in the second quarter and made up much of the ground lost in the first quarter, as it recorded an overall sales drop of only 3.0 percent in the first half.
The US also returned to growth in June, although sales fell by 13.7 percent year-on-year in the first half, while sales in Europe were 29.5 percent lower during the six-month period.
The overall passenger car market in China declined by 26.0 percent in first half, while the US and Europe fell by 24.0 percent and 38.1 percent respectively during the same period.
“The downturn we saw in the first half is a temporary one,” said Håkan Samuelsson, chief executive. “We expect to see a strong recovery in the second half of the year and our Recharge range of electrified cars puts us in a strong position to meet the emerging trends we are seeing.”
Volvo Cars’ global sales during the first six months of 2020 fell by 20.8 percent to 269,962 cars, as governments in many key markets implemented stay-at-home orders or other restrictions on movement, severely affecting economic activity and showroom traffic.
The company took proactive and quick action to mitigate the pandemic’s impact in a safe and pragmatic way and with a focus on fixed cost and cash flow management. This allowed it to protect its people and its business.
Volvo Cars temporarily closed its manufacturing facilities and implemented work time reduction with the support of government programmes. It then quickly made a soft restart, with various precautionary measures in place, in order to safely welcome back employees to work. All in all, the Torslanda plant in Sweden lost only 15 days of production during the period.
“This pandemic has strengthened our confidence that our strategic ambitions are the right ones and that an accelerated transformation of our business will lead to long-term growth,” said Mr Samuelsson. “We will continue to focus on and invest in electrification, online sales and connectivity.”
Volvo Cars is the only car maker to offer a plug-in hybrid variant on every model in its portfolio. Later this year, it will start production of the XC40 P8 Recharge, the company’s first fully electric model and the first of several fully electric models to be launched in coming years.
“If the market recovers as we expect, we anticipate sales volumes to return to the levels we saw in the second half of 2019 and it is our ambition return to similar profit levels and cash flow.”
Full details on Volvo Cars’ financial results for the first half of 2020 can be found HERE.
Volvo Car Group in 2019
For the 2019 financial year, Volvo Car Group recorded an operating profit of 14.3 BSEK (14.2 BSEK in 2018). Revenue over the period amounted to 274.1 BSEK (252.7 BSEK). For the full year 2019, global sales reached a record 705,452 (642,253) cars, an increase of 9.8 per cent versus 2018. The results underline the comprehensive transformation of Volvo Cars’ finances and operations in recent years, positioning the company for its next growth phase.
About Volvo Car Group
Volvo Cars was founded in 1927. Today, it is one of the most well-known and respected premium car brands in the world with sales of 705,452 cars in 2019 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding since 2010.
In 2019, Volvo Cars employed on average approximately 41,500 (41,500) full-time employees. Volvo Cars head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars head office for APAC is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium), South Carolina (US), Chengdu and Daqing (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China) and body components in Olofström (Sweden).
Under its new company purpose, Volvo Cars aims to provide customers with the Freedom to Move in a personal, sustainable and safe way. This purpose is reflected into a number of business ambitions: for example, by the middle of this decade it aims for half of its global sales to be fully electric cars and to establish five million direct consumer relationships. Volvo Cars is also committed to an ongoing reduction of its carbon footprint, with the ambition to be a climate-neutral company by 2040.