Geely-owned Volvo Cars has reported first half financial results severely dented by the impact of the COVID-19 crisis, but expects its business to recover in the second half of the year as car markets ‘normalise’.
The company recorded an operating loss of 989 million SEK over the first six months of 2020, as revenue fell by 14.1 per cent to 111.8 billion SEK.
While sales fell in absolute numbers during the first half, Volvo Cars says it gained market share in China, the US and Europe, where Germany was among the strongest performing markets. It also saw an increase, of 79.8 per cent in demand for its chargeable plug-in hybrid models sold under the Volvo Recharge brand, while it experienced a strong growth in consumer interest in its online sales channels, too.
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 per cent in the first half.
The US also returned to growth in June, although sales fell by 13.7 per cent year-on-year in the first half, while sales in Europe were 29.5 per cent lower during the six-month period.
The overall passenger car market in China declined by 26.0 per cent in first half, while the US and Europe fell by 24.0 percent and 38.1 percent respectively during the same period.
“The downturn we saw in the first half is a temporary one,” said Håkan Samuelsson, Volvo Cars chief executive. “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 per cent 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.
Volvo Cars temporarily closed its manufacturing facilities and implemented work time reduction 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 company says 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 return to similar profit levels and cash flow.”