Swedish automaker Volvo Cars reported a 12% increase in operating income and record revenue in 2024, but faced challenges in the final quarter and anticipates a turbulent 2025 due to market volatility, intensified EV competition, and potential global trade disruptions.
Volvo Cars , the Swedish automaker majority-owned by China's Geely Holding, reported a 12% increase in full-year operating income to 22.3 billion Swedish kronor ($2.04 billion) in 2024, accompanied by an 8% rise in sales and record revenue. However, the company cautioned about significant market challenges ahead, driven by intensifying electric vehicle competition and global trade tariffs.
Despite the positive financial results, Volvo Cars' profit declined by 28% in the last three months of 2024, attributed to a one-off 1.7 billion kronor impairment related to its joint venture with Swedish battery developer Northvolt, Novo Energy. Year-on-year sales for the fourth quarter edged up by 1%, but experienced a 6% drop in China and a 2% decrease in the U.S.Volvo Cars reaffirmed its 2026 guidance to achieve a core earnings before interest and taxes (EBIT) margin of 7-8%, but characterized 2025 as a 'challenging and transition year' toward its long-term growth aspirations. The company anticipates slower market growth and an increase in industry-wide discounts. In September 2023, Volvo Cars revised its stance and abandoned its earlier plan to sell only electric vehicles (EVs) by 2030, citing 'different speeds of adoption' by customers. In its 2024 results, the proportion of battery EV sales climbed to 23% from 16% in the previous year.Volvo Cars CEO Jim Rowan acknowledged the company's performance in 2024 despite market turbulence, predicting heightened market volatility in 2025. He identified potential sources of disruption, including trade tariffs, geopolitical developments, policy changes, and a slowdown in the EV transition. Rowan emphasized that Volvo Cars' focus on mild hybrid and plug-in hybrid technology would help mitigate the impact of these challenges. Moreover, Rowan highlighted the company's proactive approach to address the rising cost of imported batteries due to U.S. tariffs. Volvo Cars is currently evaluating the need to relocate production facilities or suppliers to different parts of the world to safeguard its operations. He also pointed to the escalating competition in China's automotive market, driven by technological advancements and price pressures, which he expects will eventually ripple through Europe and North America.
VOLVO CARS AUTOMOTIVE INDUSTRY ELECTRIC VEHICLES GLOBAL TARIFFS MARKET COMPETITION CHINA PRODUCTION RELOCATION
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