Electrified Volvo sales rise but overall volumes dip

Volvo sales fell sharply in the second quarter of 2022 - but it was able to shore up revenues and post an uptick in electrified car demand. The Swedish marque's latest report lays bare the impact of ongoing industry headwinds – among which it cites "uncertainties in global trade, increasing raw material prices, and supply chain constraints arising out of recent pandemic lockdowns in China". Volvo sold 143,006 cars last quarter, down 27% on the same period in 2021. The Chinese Covid lockdowns were a driving factor in this downturn, not only inhibiting the firm's ability to deliver cars to customers in China, but also to build cars at its Chengdu, Daqing and Luqiao factories. It expects the situation in China will continue to affect its sales volumes throughout the third quarter. Despite the dip in sales, Volvo was able to limit the impact on revenues to a significantly smaller 2% decline year on year, citing "strong pricing and product mix" - having boosted list prices to balance out its lower volumes. The entry-level Volvo XC40 SUV, for example, is currently priced from £35,830, compared with a starting price of £25,200 in September last year. A continued rise in demand for Volvo's electrified models also helped to shore up margins: its Recharge-badged hybrids and EVs made up 31% of its volumes, up from 24% in Q2 last year - and it is aiming for the electric Volvo C40 Recharge and XC40 Recharge to account for "a double-digit share" of its 2022 output, more than doubling its 2021 EV sales mix. Volvo Cars generated 71.3 billion SEK (£5.81bn) last quarter, of which 4.6bn SEK (£370m) was profit - a 6.5% margin. It says earnings before tax and interest were boosted by the listing of sibling brand Polestar – of which it is the majority shareholder – on the Nasdaq in June. Elsewhere, Volvo says its supply chain is beginning to stabilise after a protracted turbulent period, "with production making a strong comeback in June", and it anticipates an uptick in output over the coming months. It is still aiming to sell more cars overall in 2022 than in 2021 but says the "time lag between production and retail deliveries" means the official full-year figures may not reflect that. CEO Jim Rowan summed up the firm's past three months: “When looking back at Volvo Cars’ performance during a very turbulent second quarter, we are satisfied that we have delivered steady earnings. “The demand for our products continues to be robust and we remain focused and clear that the short-term business challenges will not weaken our resolve to meet our mid- to long-term strategic ambitions. If anything, it will only speed up our pace of change."

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Electrified Volvo sales rise but overall volumes dip

Lockdowns in China and supply chain struggles impact Volvo's output, but bosses are optimistic

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