Despite the sales increase, the Swedish company said its margins are being pushed as a result of increased price pressures and trade restrictions. Volvo's operating profit margin for 2018 was 5.6 percent, a drop from 6.7 percent in the previous year.
“We had a good result but we didn’t achieve the growth that we had expected with that volume increase,” Volvo president and CEO Håkan Samuelsson told TT.
Samuelsson said the company’s tighter margins are due to increased price pressure within the market and the effect of trade tariffs.
The company’s operating profit in the fourth quarter of 2018 was 4.5 billion kronor, a 25 percent increase over the corresponding period in the previous year. Volvo sold 169,700 vehicles in 2018’s final quarter, a 7.3 percent jump over the corresponding period a year earlier.
The roughly 642,000 vehicles that Volvo sold throughout 2018 set the company’s single-year sales record and Samuelsson said he anticipates that 2019 will follow suit.
“We expect that 2019 will be another year with increased volumes, in line with our long-term ambitions,” he said.
Volvo’s encouraging numbers came after two major recent vehicle recalls. The company announced on Wednesday that it is recalling 13,000 vehicles in Sweden, and 167,000 cars worldwide, because the power-operated tailgate may stop functioning in cold climates. That came just two weeks after Volvo recalled 219,000 vehicles to fix potential fuel leaks in the engine compartment.