Volvo Cars, known for its luxury vehicles and commitment to electrification, has revised its 2024 sales forecast downward, citing a slowdown in the global automotive market. The company now expects retail sales to grow by 7-8% this year, down from its previous projection of 12-15%, highlighting the growing challenges in the premium electric vehicle (EV) segment.
Jim Rowan, Volvo’s CEO, expressed concern about the market’s weakening demand. “There’s no doubt the sector is getting tougher,” he said in an interview. “We’re seeing a slowdown in consumer sentiment, partly driven by high inflation. Many buyers are relying on car loans, and rising inflation is affecting their ability to afford new vehicles.”
Despite these challenges, Volvo Cars reported a stronger-than-expected third-quarter operating profit of 5.8 billion Swedish crowns ($550 million), surpassing last year’s 4.5 billion crowns. Analysts at JP Morgan and Bernstein had forecasted lower earnings, making this result a positive surprise for investors.
However, the luxury car market, which Volvo relies on, is now facing mounting pressures. The automaker had previously believed that demand weakness was mainly affecting the mass market, but Rowan acknowledged that the problem has now spread to the premium sector as well. “We are not immune to the broader market challenges,” Rowan added.
The slowing demand for electric vehicles has been driven by a combination of factors. Consumers have voiced concerns over the affordability of EVs, and the slow rollout of charging infrastructure has made adoption difficult. Additionally, Chinese automakers have intensified competition by offering lower-priced models, putting added pressure on European manufacturers like Volvo.
Volvo had previously set ambitious targets for electrification, with plans to phase out hybrid vehicles. However, the company recently extended its timeline, opting to continue selling new hybrid models longer than originally planned.
The Swedish automaker, majority-owned by China’s Geely, is also adjusting its profit margin targets. Rather than setting a specific sales goal, Volvo aims to outgrow the premium car market, hoping that its new EX30 and EX90 SUVs will drive higher margins.
As the final quarter of 2024 approaches, Volvo is preparing for no further growth, reflecting broader economic concerns. With inflation impacting both consumer spending and borrowing power, the outlook for luxury vehicle sales remains uncertain.
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