Volvo Cars has reported its financial results for the first half of 2020, which while impacted by the coronavirus pandemic and its effect on the global economy, indicate an expectation for the business to recover in the second half of the year, as car markets normalise.
The company recorded an operating result of -989 million SEK (US$111.11m) over the first six months of 2020, as revenue fell by 14.1% to 111.8 billion SEK (US$12.56bn).
While sales fell in absolute numbers during the first half of the year, Volvo Cars says that it took market share in China, the USA and Europe, with Germany being among the strongest-performing markets. The company also saw a strong increase, of 79.8%, in demand for its chargeable plug-in hybrid models sold under the Volvo Recharge brand, while it also experienced strong growth in consumer interest in its online sales channels.
The company returned to sales growth in China in the second quarter and made up much of the ground lost in the first quarter, as it recorded an overall sales drop of only 3.0% in the first half of the year.
The US also returned to growth in June, although sales fell by 13.7% year-on-year in the first half, while sales in Europe were 29.5% lower during the six-month period.
The overall passenger car market in China declined by 26.0% in the first half of the year, while the US and Europe fell by 24.0% and 38.1% respectively during the same period.
“The downturn we saw in the first half is a temporary one,” said Håkan Samuelsson, chief executive of Volvo Cars. “We expect to see a strong recovery in the second half of the year, and our Recharge range of electrified cars puts us in a strong position to meet the emerging trends we are seeing.”
Volvo Cars’ global sales during the first six months of 2020 fell by 20.8% to 269,962 cars, as governments in many key markets implemented stay-at-home orders or other restrictions on movement, severely affecting economic activity and showroom traffic.
The company took proactive action to mitigate the pandemic’s impact, with a focus on fixed cost and cash flow management that enabled it to protect its people and its business.
Volvo Cars temporarily closed its manufacturing facilities and implemented work time reductions with the support of government programmes. It then quickly made a soft restart, with various precautionary measures in place, in order to safely welcome back employees to work. The Torslanda plant in Sweden lost only 15 days of production during the period.
“This pandemic has strengthened our confidence that our strategic ambitions are the right ones and that an accelerated transformation of our business will lead to long-term growth,” said Samuelsson. “We will continue to focus on and invest in electrification, online sales and connectivity.”
“If the market recovers as we expect, we anticipate sales volumes to return to the levels we saw in the second half of 2019, and it is our ambition to return to similar profit levels and cash flow.”