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Volvo Cars shares down 8% as first-quarter revenues fall

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A Volvo EX30 fully electric EV Car is displayed during the Everything Electric London 2024 at ExCel on March 28, 2024 in London, England.

John Keeble | Getty Images News | Getty Images

Shares of Swedish automaker Volvo Cars fell more than 6% in early trade on Wednesday after a drop in first-quarter revenues.

Revenue came in at 93.9 billion Swedish kronor ($8.65 billion) in the first three months of the year, down 2% from the first quarter 2023.

Company shares were 8% lower by 10:15 a.m. London time.

It comes as first-quarter core operating profit rose 8% year-on-year to 6.8 billion Swedish kronor. The figure excludes joint ventures and associates.

Retail sales also rose 12% year-on-year to 182,687 cars, after a new all-time monthly sales record in March.

Volvo CEO Jim Rowan said that while the sales growth was broad-based, the company’s focus on premium autos had left it less exposed to increased competition and weaker mass market consumer spending.

“I think it’s because we play into that premium market sector that we’re a little bit more protected,” he told CNBC’s “Squawk Box.”

Diversification of portfolio means Volvo is not fully reliant on EV sales, says CEO

The automaker said the results showed it was “on track” toward its target of at least 15% annual sales volume growth.

“We have had a strong start to the year, with our first quarter results laying a solid foundation for the year ahead,” Rowan said in a statement.

The growth included a modest uptick in electric vehicles sales, as the company has doubled down on the category. EV gross margins rose to 16% in the first quarter from 7% the year prior.

Rowan said it was one of the few companies that can boast those levels of margins in the EV range.

“I think we’re a little bit ahead of at least some of our competitors, and we plan to stay that way,” he said.

“Our focus is not only on delivering the best EVs with the latest technologies, but to do so with solid margins,” Rowan said.

Looking ahead, Volvo Cars said it expects a further rise in 2024 retail sales compared to the previous year, with the share of fully electric vehicles forecast to increase “considerably.”

Competition is heating up in the EV market, with Chinese automakers seen ramping up production of lower-cost electric vehicles. Beijing has denied claims from Washington and the EU that its producers are undercutting international competition.

Rowan said that Volvo had not seen an impact from overcapacity concerns, noting that it was targeting high-end EV sales in China.

“We’ve entered the China market at the premium sector,” he said. “Where there’s mass competition in the mass market in EV, we don’t play in that space.”

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