Volvo: Profit Margins, Not Volume, to Drive Revenue Growth

Volvo’s high-priced premium products will be the driver of revenues rather than volume output.

That was the business forecast made by the automaker’s president and CEO Martin Lundstedt at Volvo Group’s annual Capital Markets Day. Lundstedt says the ongoing technology shift to electrification is expected to accelerate the group’s profit growth mainly because EVs’ profit margins are better than those of ICE vehicles, and the market appears able to accept high retail prices.

Volvo executives say EVs have the potential to increase total vehicle and service revenues per unit by more than 50% over the lifecycle. The automaker sees its role as an early adopter of electrification as an asset in gaining market share, while offering a broader range of services also is expected to drive revenue growth.

However, Lundstedt says Volvo recognizes financial challenges remain along the way. He says: “Climate change is the challenge of our generation. At the same time, demand for transport and infrastructure continues to grow and we must meet this demand with more sustainable solutions.

“In this changing landscape, we can lead the transformation and provide increased value for our customers and embark the Volvo Group on a growth journey driven by electrification, autonomous solutions and new productivity services. We are geared for growth.”

Lundstedt also stresses the company’s ability to maximize its profitability with its focus on modular vehicle platforms: “Our modular vehicle architectures will continue to serve us well, creating flexibility as well as cost and capital efficiencies in both R&D and the industrial system as we go through the transformation to electric and autonomous vehicles.

“We invest to win.”