Volvo Gets Very Bullish
Volvo Cars is way out ahead of other carmakers in predicting a sales and financial recovery for itself.
CEO Hakan Samuelsson, noting that Volvo’s July sales are ahead of last year, forecasts that the company’s second-half results will bounce back to pre-pandemic levels.
Hakan Samuelsson (Images: Volvo)
Out with the Bad, in with the Good
Samuelsson believes Volvo got all its bad news out of the way in March-June. The company’s net income in the first half plunged by nearly two-thirds to $134 million as revenue slid 14% to $12.5 billion.
Volvo shed 1,300 white-collar jobs and arranged a $1.2 billion line of credit to tide it through.
Now, the CEO tells the Financial Times, “We do not need a miraculous recovery, just that the trends we have seen will continue.” Aside from rising COVID-19 cases in the U.S., he anticipates no second wave of the pandemic in major markets.
Slow Going in the U.S.
A few bumpy spots remain, though.
In the U.S., the company’s 2-year-old S60 sedan plant outside Charleston, S.C., was shuttered in late March for six weeks as the coronavirus pandemic struck. After reopening in early May, the $1.1 billion facility closed again in five weeks.
Volvo S60 sedan
This time it was all about supply chain problem involving vendors in Mexico, according to the company.
Volvo opened the factory once more at the end of June. But it stopped four days later and won’t resume until July 29. The latest pause is an extended version of the facility’s annual summer break, prompted by softening demand for the S60, especially in the U.S.
SUVs to the Rescue
Not that the sales trends were a big surprise. Through the first half of 2020, SUV/crossovers accounted for more than two-thirds of Volvo sales worldwide. Sedans such as the S60 contributed a collective 14%.
The ever-positive Samuelsson says the South Carolina plant will be back on track in 2022. That’s when Volvo’s XC90 large luxury crossover will join the production lineup. The factory has annual capacity to make 150,000 vehicles, and Samuelsson predicts output will be at capacity by then.
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