Major tax blow for Volvo Cars

The National Tax Board of Sweden has ruled that Volvo Cars owes 780 million kronor in unpaid taxes, having sold its products to distributors in four export markets at an unacceptable discount price.

After a year-long investigation the tax board concluded that Volvo’s pricing was unproblematic in all countries bar four: Finland, Thailand, Taiwan and Singapore.

According to the tax authorities, the methods used by the company run counter to international agreements on internal pricing.

Volvo made large gains from its pricing policy in these four countries, according to tax board accountant Per Johan Åseskog.

“While they have paid taxes in these countries, on the whole they have made money by paying less on customs and other charges,” Åseskog told Sveriges Radio.

In addition to the 780 million kronor owed for the years 2004 and 2005, the company has to pay an extra charge of 50 million kronor.

Åseskog was not able to estimate the extent to which other car manufacturers had used the same method to keep prices down in these four countries.

“We have no insight into that,” he said.

It is not yet known whether Volvo Cars will appeal the tax board’s decision

“It’s not decided yet. We have to discuss it with our owners first,” spokeswoman Katarina Paulsson told news agency TT.


Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.