Göteborg (Business Emerge), September 6: Volvo Cars, the Swedish automaker, announced on Thursday that it is once again revising its profit margin and revenue expectations for the year, citing difficult market conditions. This marks the second adjustment in 2024, coming just a day after the company dropped its ambitious plan to fully switch to electric vehicle (EV) sales by 2030. Volvo pointed to several factors, including the effects of tariffs and slowing demand for EVs, as key reasons for the shift.
The global auto industry is grappling with lower demand for electric vehicles, driven in part by a lack of affordable models. Adding to the challenge, tariffs imposed by the EU, U.S., and Canada on electric cars produced in China have further complicated market dynamics. These pressures have made it increasingly tough for automakers to meet previous targets.
Majority-owned by China’s Geely, Volvo Cars has now set a new goal for its operating profit margin, excluding joint ventures and associates, lowering it to 7-8%, down from the previously anticipated figure of over 8%. Additionally, the company has abandoned its earlier sales target of 550-600 billion Swedish crowns (approximately $53.5 billion to $58.4 billion). Instead, Volvo is now aiming to outpace the overall premium car market in terms of growth.
Earlier in the year, Volvo had already scaled back its objectives, stepping away from the previously announced goal of achieving annual sales of 1.2 million vehicles and an EBIT margin of 8-10% by mid-decade, a target initially set in 2021.
Although Volvo had been one of the industry leaders in promoting a 100% EV lineup by 2030, it has adjusted this plan. The company now aims for 90% of its sales by that time to come from a mix of plug-in hybrid and fully electric vehicles. CEO Jim Rowan noted that the transition to full EV sales is taking longer than initially anticipated when the company first set its goals.