Former parent ‘not interested’ in Volvo Cars

Volvo Cars' one-time parent company Volvo Group has thrown cold water on claims that it is mulling membership of a consortium working to bring the auto maker back to Sweden.

Former parent 'not interested' in Volvo Cars

Volvo Group on Monday rejected reports that the company, led by CEO Leif Johansson, was preparing to put its weight behind the Jakob AB investment project, a consortium reportedly set up on the initiative of the engineering trade union at Volvo Cars.

“We’re not interested in investing in Volvo Cars,” said Volvo Group spokesman Mårten Wikforss.

Ten years have passed since truck maker Volvo Group sold its car division to US auto giant Ford. Nevertheless, Volvo Group said it continued to follow the current sale process closely.

“Of course we are following the whole thing from the perspective that we own half the trademark. But we have no interest in investing in the company,” said Wikforss.

Jakob AB, named after one of the original Volvo cars, is a company that has been formed with the intention of attracting investors to Volvo Cars. Several parties have expressed concern about the likelihood of Volvo Cars ending up in Chinese hands, with a consortium led by Geely rumoured to be closing in on a bid.

“We’re trying to find an alternative to Chinese ownership. We’re worried about production and product development leaving Sweden,” Sören Carlsson, head of the Unionen labour group at Volvo Cars, told news agency TT.

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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.