Volvo and Geely in two minds over China plans

Volvo Cars and its Chinese owners Geely have different ideas on how best to market the Sweden-based firm's models in China.

Volvo and Geely in two minds over China plans

Geely chairperson Li Shufu wants to see large, luxury vehicles which is not part of Volvo’s plans for China.

Li aired his opinions in the Chinese state-owned Securities Times (ST) newspaper, the first time the Chinese owners have publicly expressed an opinion distinct from their Swedish subsidiary.

According to Li, Volvo Cars maintain that large cars require more fuel and more material to manufacture, and argue that the global car industry is developing towards more fuel-efficient and eco-friendly models.

Li Shufu appeared unruffled by the differences of opinion, arguing that they will be solved given time and would lead to an improvement in coordination between the firms, while he is reported to have expressed criticism in his interview.

Any connection between Li’s criticism and the resignation of Magnus Jonsson, head of Volvo’s product development, has been rejected by Jonsson in a comment to the Göteborgs-Posten (GP) daily.

Volvo Cars has not issued a response to Li Shufu’s comments.

“We have not had it confirmed from Li Shufu directly. We have sent an email to Geely, but have not received an answer,” said Volvo Cars’ Olle Axelson to GP.

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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.