A few days ago, Volvo released its third-quarter financial report. The company’s revenue rose by 30% year-on-year, but its operating profit performance was poor, down 19% year-on-year. Various factors such as rising raw material prices and declining sales have become the main culprits that have dragged down the company’s profitability.
Specifically, in the third quarter of 2022, Volvo achieved operating income of SEK 79.3 billion, a year-on-year increase of 30%; operating profit (excluding joint ventures and associates) was SEK 3.5 billion, down 19% year-on-year; net profit of 700 million SEK, with a profit margin of 4.4%. It is worth mentioning that in the same period in 2021, Volvo’s net profit for the same period was SEK 2.3 billion, and by 2022, this value will drop by nearly 70%. The sharp drop in Volvo’s net profit also reflects the common problems faced by the global auto industry to a certain extent.
Volvo President and CEO Jim Rowan said that global macroeconomic uncertainty weighed on (the company’s) third-quarter performance, but he also emphasized that with a flexible organization, strong financial position and ample liquidity, “We have the confidence to weather the ongoing challenges.” According to the financial report, in the third quarter of 2022, Volvo’s net cash reached 30.3 billion Swedish kronor, a 151% increase compared to the same period last year.
Volvo expects that in the current half of 2022, the company’s production, wholesale and retail sales will increase compared with the same period in 2021. However, wholesale sales in 2022 may be slightly lower than in 2021, but only if there are no further major disruptions at the supply chain level, the company’s wholesale and retail sales are likely to maintain similar levels in 2021.
Rowan also revealed that Volvo will transform into a pure electric brand by 2030 and achieve carbon neutrality by 2040. In order to firmly promote the electrification transformation strategy, Volvo will launch a new pure electric SUV model EX90 on November 9 this year. Since then, Volvo will launch a new pure electric model every year to accelerate the electrification transition.
Not long ago, Volvo revealed that it will initially invest 75 million euros to produce battery modules in a Belgian factory and start production in 2025. At the same time, the truck assembly plant in Gothenburg, Sweden, has also started to manufacture heavy-duty electric trucks, and the Ghent plant will produce electric trucks in the second half of 2023.
On the whole, Volvo’s electrification process has covered various market segments and different levels of the supply chain. As a traditional car company, Volvo’s electrification transformation has been more resolute in the promotion process, and its fuel vehicles have been The comprehensive transformation to a combination of hybrid and plug-in hybrid models has greatly improved the fuel economy of the product. However, at the same time, the price of products has also increased a lot. At the moment of the rapid development of new energy vehicles, only through the “oil-to-electricity” method to introduce new products, coupled with the high market price, consumers’ acceptance May be discounted for this.
The latest data shows that from January to September 2022, Volvo sold a total of 428,987 new vehicles worldwide, a year-on-year decrease of 19.2%, of which 128,675 new energy vehicles were sold, accounting for nearly 30%. Judging from market feedback, it is still not easy for traditional car companies to transform into electrification. If they want to finally achieve the goal of comprehensive electrification transformation, Volvo’s development prospects are still not optimistic.