10:04 am, October 24, 2024
Volvo has cut its sales forecast for 2024 despite beating third-quarter profit expectations.
The company – now owned by Chinese carmaker Geely – this week reported an operating profit of 5.8 billion Swedish Kroner (£423m) in the third quarter, ahead of forecasts from JP Morgan and Bernstein, but issued a frank warning about future revenues based on external factors.
It warned that a fall in demand for electric vehicles led by limited choice and the slower-than-expected rollout of infrastructure was affecting customer behaviour, while an influx of cheaper new Chinese brands was adding further pressure. Volvo is also bracing for the effects of European tariffs on EVs made in China, where some of its models are now built.
The company adjusted its forecast, expecting retail sales to rise by 7 to 8% this year, down from a forecast in July of 12 to 15% growth, anticipating no sales volume increase in Q4.
‘There’s no doubt that the sector’s getting tougher … We’re starting to see a slowdown in consumer sentiment, driven partly by high inflation,’ CEO Jim Rowan told news agency, Reuters.
‘A lot of people are taking car loans out in order to pay for their new vehicles, and high inflation obviously affects that.’
With Volvo Cars banking on the new EX30 and EX90 electric SUVs to become volume sellers, investors are starting to show caution.
Volvo has previously said weak demand was primarily hitting the mass market, but it now says the problem has deepened and is affecting the premium market, where its cars are positioned.
Volvo is one of several manufacturers to step away from a fully electric future in recent months, having said it will continue to sell hybrid models for longer than first planned, while it is also reintroducing the V60 and V90 estate cars to the UK market following customer feedback.
