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Volvo profits plummet as global sales slump

Volvo profits plummet as global sales slump

Published: 05 Sep 2012 17:17 GMT+02:00
Updated: 05 Sep 2012 20:52 GMT+02:00

Swedish carmaker Volvo reported an 84 percent drop in operating profit through the first half of the year compared to 2011 amid slumping sales and tough competition.

Volo Cars, owned by China's Geely Holdings, reported operating profit of 239 million kronor ($35.63 million) in the first six months of 2012, compared to 1.53 billion kronor during the same period last year.

Turnover rose to 65.3 billion kronor from 62.8 billion kronor the year before, while global sales also dropped 4.1 percent to 221,309 cars.

According to Volvo Cars CEO Stefan Jacoby, the economic uncertainties plaguing many of the carmakers major markets are likely to continue through the end of the year, and competition remains fierce.

"We find ourselves in a transition," he told reporters in Stockholm on Wednesday.

"We need to get used to the fact that we live in an unpredictable global environment."

Jacoby said a looming recession in the eurozone has already resulted in lower sales in southern Europe and Sweden.

Through August, Volvo sales in Sweden are down 12.4 percent to 32,145 cars.

Jacoby however rejected rumours of trouble with the building of Volvo's planned factory in China, saying the plant was scheduled to be in operation by 2014.

The worsening market conditions mean that Volvo will reduce production to 50 cars per hour at its factory in Torslanda near Gothenburg, resulting in the shedding of 287 positions provided by a staffing company.

But Jacoby said no layoffs of permanent staff were planned.

"For the moment, we have no ambitions to get rid of any of our full-time workers or managers," he said, according to TT.

TT/The Local/dl

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Your comments about this article

20:31 September 8, 2012 by viennacalling
If you go to Autodata US they have the august sales statistics and the big 4 Ford GM Chrysler and Toyota had a good month and YTD dont forget the japanese sales are still affected by the sunami. to me it appears that the strength of the kroner is affecting sales of the volvo
03:34 September 12, 2012 by Escort
Could this be due to the fact that Volvos are now too expensive? They have increased their prices significantly in recent years and there is much talented competition from Ford, VW, Honda, etc. which is more affordable. Almost £20,000 for the base V40 puts these beyond the reach of many private buyers who have bought Volvo in the past. They will buy a Focus, Golf or Civic instead and Volvo will left with falling sales and profits. Who can blame them?
17:18 November 10, 2012 by oledeluca
High quality, reliable and safe cars that are environmentally sound are needed but most of all - they MUST be affordable by the many! I believe that here in the USA Volvo will be a has-been. Now their primary market is the luxury market, not the middle of the line vehicles. We cannot buy an S40, V50, V40 or even a V70 only big fat gas hogs like the XC90. Big mistake! Hope they don't go the way of my favorite vehicle.... SAAB or everyone will be buying Toyota Prius', Honda Accords and my little new car the VW Golf.
21:30 February 9, 2013 by Ivan1619
Prior to owning Volvo's I owned Saabs. I loved the Saab's and was very disappointed whem GM got a hold of the company. As for Volvo's, I presently own two a 2013 S60 and a 2005 V50. I switched to Volvo's because of the quality and look upon them as the Swedish Mercedes. However, I do wish you would keep your Volvo (Local) page up to date. Although Geely now owns Volvo I am very concerned about their influence and the possibility Geely will cheap out the brand. As mentioned, cost of the car has become an issue and I suppose that's why you may build them in China. Like many I will not own a Chinese built Volvo. The Chinese Car makers have not reached Swedish standards or American standards for that matter. In summary, the idea of going to only four cylinder engines may be a mistake. If you do keep the T5 or T6 as an option. Lets hope that Volvo's will not become a has-been in the US or world market.
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