Volvo Cars reported its best ever second-half profit and sales volumes in 2020, illustrating the company’s success in mitigating and recovering from the impact of the coronavirus pandemic earlier in the year.
The company reported revenue of 151 billion SEK and an operating profit of 9.5 billion SEK for the second six months of 2020. Profits increased by 8.2 per cent during the period, while revenues were up by 4.9 per cent. The profit margin came in at a strong 6.3 per cent.
The result reflects the company’s best ever second half in terms of sales, driven by strong demand for Volvo Cars’ Recharge line-up of chargeable cars. Volvo Cars sold 391,751 cars in the second six months of 2020, an increase of 7.4 per cent compared with the same period in 2019, taking market share in most markets.
For the full year 2020, Volvo Cars reported revenue of 263 billion SEK and an operating profit of 8.5 billion SEK. It managed to reduce fixed costs in combination with growth, which had a positive influence on cash flow and liquidity.
“We acted decisively to limit the impact of the pandemic,” said Håkan Samuelsson, Chief Executive of Volvo Cars. “After a safe restart of our operations, we recovered strongly and reported the best second half in the company’s history. It is also promising to see the fast-growing demand for our Recharge line-up of chargeable cars, which we expect to continue in 2021.”
The share of Recharge cars as a percentage of total sales more than doubled in 2020 compared with 2019. In Europe, sales of plug-in hybrids represented 30 per cent of total volumes, making Volvo the leading plug-in premium brand measured as a share of its total sales volume. In the US, Volvo is also a leading plug-in hybrid brand in the market.
In China and the United States, its two largest individual markets, the company reported growing sales for the full year as it managed to recover a pandemic-related sales drop in the first half during the second half of the year. In Europe, it reported a small second-half decline due to a sluggish overall market.
During 2020, Volvo Cars also saw an accelerated move towards online sales as a result of the pandemic, a development that the company expects to continue in 2021. In 2020, Volvo Cars more than doubled its number of subscriptions sold online versus 2019. Conquest rates via this channel continued to be high, supporting the increases in market share.
For 2021, the company anticipates continued growth in sales volume and revenue as it benefits from a strong product offering and further increases in online sales. Assuming market conditions continue to normalise, this growth, as well as continued cost management, is anticipated to improve profitability to pre-coronavirus levels.
With ongoing investments in new technologies and new products, the company foresees a similar level of capital expenditure as in 2020. Cash flow is expected to remain strong. It also expects a continued reduction in its overall CO2 emissions per car, in line with the company’s ambition to reduce these by 40 per cent by 2025.
Volvo Car Group in 2020
For the 2020 financial year, Volvo Car Group recorded an operating profit of 8.5 BSEK (14.3 BSEK in 2019). Revenue over the period amounted to 262.8 BSEK (274.1 BSEK). For the full year of 2020, global sales reached 661,713 cars (705,452), a decline of 6.2 per cent compared to 2019.
About Volvo Car Group
Volvo Cars was founded in 1927. Today, it is one of the most well-known and respected car brands in the world, with sales of 661,713 cars in 2020 in about 100 countries. Volvo Cars has been under the ownership of Zhejiang Geely Holding since 2010.
As of December 2020, Volvo Cars employed approximately 40,000 (41,500) full-time employees. Volvo Cars’ head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars’ head office for APAC is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium), South Carolina (US), Chengdu and Daqing (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China), and body components in Olofström (Sweden).
Under its new company purpose, Volvo Cars aims to provide customers with the Freedom to Move in a personal, sustainable and safe way. This purpose is reflected in a number of business ambitions: for example, by the middle of this decade it aims for half of its global sales to be fully electric cars and to establish five million direct consumer relationships. Volvo Cars is also committed to an ongoing reduction of its carbon footprint, with the ambition to be a climate-neutral company by 2040.