Volvo will begin production of the flagship EX90 electric vehicle later this year.
STOCKHOLM, Sweden (AP) — Volvo Cars said Thursday that 2023 is likely to be another tough year despite strong demand for its vehicles, as the Swedish automaker reported a decline in quarterly profit.
Volvo, which is majority-owned by Chinese carmaker Geely Holding, said its fourth-quarter operating profit fell to 3. 4 billion kroner ($322. 2 million) from 3. 7 billion crowns a year earlier. one year old.
Profits have been hurt by high lithium prices, high logistics prices and a requirement to buy semiconductors on the spot market, which can be more expensive than long-term contracts.
Volvo and its rivals have faced persistent chip shortages over the past year that have periodically affected manufacturing, and the Sweden-based company was forced to temporarily halt production at some plants.
Other supply chain issues, the energy crisis and runaway inflation have also made life more complicated for the company.
“While 2023 looks like another challenging year, we expect the shortage of COVID-related sources in China to be us and that we will continue to see a steady improvement in the semiconductor source,” he said in a statement.
“Despite global turbulence, uncertainty and our recent value increases, we continue to see healthy demand for our cars,” Volvo said, adding that it expects “solid” double-digit retail sales expansion in 2023.
Volvo’s annual sales fell 12 to 615,121 last year.
Volvo Cars reaffirmed its mid-decade targets, which come with promoting cars at an annual rate of 1. 2 million, some of which are electric.
Some analysts had said before the report that the target was too ambitious.
“We still doubt that the company will be able to meet those goals before 2027 and the company will particularly want to expand its definition of ‘mid-decade,'” Bernstein said.
The CEO defends his goal
CEO Jim Rowan defended Thursday in an interview with Automotive News Europe.
“I’m sure we can still do it,” he said. By the middle of the decade, we’re going to have five or six electric vehicles, all refurbished, all equipped with the newest technology, all at a price point where we expect to see a big shift towards electrification. “
Rowan said a key to expanding Volvo’s volume would be a small SUV expected to be unveiled by mid-year. He said the vehicle would succeed in a younger population without reducing sales of any of its other models.
No EV worth dropping
He also said Volvo has no plans to reduce the value of its vehicles, despite measures taken by Tesla and Ford.
“Demand is highest for our BEVs [battery electric vehicles],” Rowan told ANE.
December is the most powerful month on record for Volvo-produced cars, with a turnover rate of around 72,000, Rowan said.
Asked via the ANE at a conference call with media and analysts whether Volvo’s load optimisation plans meant job cuts and, if so, which markets would be affected, Rowan said no cuts were planned.
“If you take a look at our electrification adventure and expansion ambitions, as well as this transition to new technologies, we are confident that we will occupy our entire staff for years to come,” he said.
Volvo shares fell more than 3 percent at market open, but were up just 2 percent around 1 p. m. CET.
Douglas A. Bolduc and Reuters contributed to this report.
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