While Volvo Cars reports third-quarter increases in revenues and profits, it acknowledges the results suffered from “macroeconomic uncertainties around the world.”
President and CEO Jim Rowan (pictured, below left) says an operating profit, excluding joint ventures and associates, of SEK 3.5 billion ($320 million) with a profit margin of 4.4%, could have been even better were it not for multiple headwinds facing the global car industry.
While sales volumes fell 8% during the quarter from a year earlier, revenues increased 30% during the period.
The automaker says this reflects its pricing power and robust demand for its SUVs, especially the electrified Recharge lineup. However, higher raw material costs, spot buying of semiconductors to fill a production shortfall and logistics costs contributed to a lower operating profit than could have been achieved, the company says. The EBIT margin, including JVs and associates, reached 2.6% during the period.
Manufacturing output continued to improve in Q3 compared with the previous quarter. However, factors such as power outages and COVID-19-related lockdowns in China slowed the pace of normalization Volvo was expecting. Provided there are no further major supply chain disturbances, the company expects the improved production run rate to continue into the fourth quarter and into 2023.
Demand for premium electrified cars remains robust and sales of fully electric Volvo cars rose 87% year-on-year during the quarter; EVs were 7% of total sales. For 2022, the company expects the share of its fully electric cars to be tracking toward a double-digit share.
Online sales also continued to grow, with the number of active subscriptions under the Care by Volvo brand rising 67% in the third quarter from prior year. In the third quarter, however, online sales made up 6% of total sales in established markets compared with 8% in the same period last year. Volvo says this was a result of its prioritization of other sales channels during the period.
Rowan says: “We remain focused on that strategic direction. We are on an exciting path to transform our company towards becoming a fully electric car brand by the end of this decade and reach climate neutrality by 2040.”
