According to Reuters, Volvo Cars expects robust market demand for the full year following a double-digit increase in retail sales in the first quarter. However, the company experienced a decline in revenue and operating profit below expectations in the previous quarter.
In the first quarter of this year, Volvo Cars' retail sales increased by 12% year-on-year to 182,687 units, with a record monthly sales high in March. The performance was particularly strong in the European and American markets, with 11 markets including Germany, France, the Netherlands, Canada, and Turkey setting new sales records.
Of Volvo Cars' sales in the first quarter, 41% came from plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs), with the share of electric vehicles rising from 18% in the same period last year to 21%. Volvo Cars expects retail sales in 2024 to further increase, with a "substantial" increase in the share of pure electric vehicles.
Jim Rowan, CEO of Volvo Cars, stated in a press release, "We expect strong product demand in the coming quarters, aligning with our expectation of at least 15% growth in annual sales."
According to Volvo Cars' financial report, revenue for the first three months of this year was SEK 93.9 billion, down nearly 2% year-on-year; operating profit decreased from SEK 5.1 billion in the same period last year to SEK 4.7 billion (approximately USD 435 million), attributed to negative foreign exchange rates and a decline in revenue from industrial operations. J.P. Morgan had previously expected the company's operating profit for the first quarter to be SEK 5.93 billion.
However, Volvo Cars' adjusted operating profit for the first quarter (excluding joint ventures, associates, and one-time items) increased by 8% year-on-year to SEK 6.8 billion (approximately USD 630 million). J.P. Morgan stated, "Overall, this is a good start."
In the previous quarter, Volvo Cars achieved a gross profit margin of 16% for its pure electric vehicles, up from 13% in the previous quarter. Rowan noted that Volvo Cars is one of the few companies with such a high-profit margin in the electric vehicle segment and believes the company can improve the profitability of electric vehicles while continuing to remain profitable amid industry challenges, despite significant investments in capacity and technology development exceeding market demand, leading to a slowdown in electric vehicle sales growth and increasing pressure on cost reduction for manufacturers and suppliers.
