Volvo Cars Accelerates Sales And Profits In 2022

Volvo Cars reported a full-year 2022 operating profit of SEK22.3 billion (approx. RM98.84 billion), including joint ventures and associates, and a profit margin of 6.8%, despite prolonged supply constraints, Chinese lockdowns, and higher material and logistics costs last year.

"We made significant progress on our strategic ambitions in 2022, as we accelerated towards our goal of becoming a fully electric car company by the end of the decade and climate neutral by 2040," said president and chief executive Jim Rowan in a statement.

The automaker reiterated its goal of reaching a 50% global sales share of fully electric vehicles by 2025, with a 40% lower carbon footprint per vehicle and an 8%-10% profit margin.

“We remain steadfast on that strategic journey,” added Rowan.


Sales

Electric vehicle sales more than doubled last year to 11% of total volume, up from 4% in 2021. This included strong fourth-quarter sales of pure electric vehicles, with the proportion reaching a record 18% versus 6% in Q4/21. Despite the fact that overall sales were impacted by production constraints.

The Recharge lineup, which includes BEVs and plug-in hybrids, accounted for 33% of total 2022 sales and 41% in the fourth quarter. Brazil, Uruguay, Thailand, and Indonesia all had 100% Recharge sales share in the fourth quarter, followed by Norway (98%), Ireland (91%), and Sweden (89%). Revenue for the fiscal year 2022 increased 17% year on year to a record SEK330.1 billion, owing to improved product mix, higher prices, foreign exchange gains, and Polestar contract manufacturing.

Operating performance


EBIT excluding joint ventures and associates fell 15.7% to SEK17.9 billion, with a margin of 5.4%. “Despite a favourable product mix and strong pricing, the EBIT performance was affected by lower volume on the back of production constraints, increased raw material and freight costs, and spot buying of semiconductors, Volvo said, adding: “For the duration of 2023, the company anticipates that raw material prices, especially lithium, will remain at elevated levels and spotbuying of semiconductors will continue.”

As the supply situation improved, second-half plant output increased by 15% (especially during the fourth quarter) compared to the first half of the year.
Volvo Cars was an early adopter of the subscription sales model and was rewarded in 2022 with a 49% increase in active subscriptions year on year. The number of vehicles sold online increased by 17%. “This growth was driven by increasing customer demand in combination with a broadened offer in more markets,” the automaker said.

2023 Outlook


"While 2023 appears to be another challenging year," the company says, "the company is hopeful that the Covid-related supply shortages from China are behind it and that it continues to see steady improvement in semiconductor supply." It was “optimistic” the price of lithium would start to decline towards the end of this year, in line with many independent reports published recently.

“It is clear now that uncertainty and volatility are the inescapable business realities of today, and therefore creating a more cost aware culture is a key building block for the future.” It expects “solid double digit growth” in retail sales during this year, “provided there are no unexpected supply chain disruptions,” said Jim Rowan.