Swedish automaker Volvo Cars announced second-quarter operating earnings significantly exceeding estimates on Thursday, but revised its 2024 retail sales growth forecast downwards due to an industry-wide slowdown. The stakes are high for automakers and suppliers who have been heavily investing in electric vehicles, facing a slowdown in sales while their investments in capacity and technology exceed demand. This situation has intensified the pressure on companies to reduce costs.
Despite earlier warnings about a slowdown in electric car demand throughout the year, Volvo Cars, like other companies, has recently reported positive EV sales. However, the company revised its full-year retail sales growth forecast on Thursday, now expecting a growth of 12%-15%, down from the previously anticipated 15%. Volvo Cars' operating income, including its stake in the loss-making Polestar, increased to 8 billion crowns ($758.4 million) from 5 billion crowns a year earlier. This figure surpassed the 6.7 billion crowns predicted by analysts based on LSEG data.
Excluding joint ventures and associates, the company's operating income rose to 8.2 billion crowns in the quarter compared to 6.4 billion a year ago. The company's battery electric vehicle (BEV) gross margins improved to 20% from 16% in the previous quarter, supporting CEO Jim Rowan's view that margins will continue to increase.
