Volvo: Strengths and weaknesses in financial and market performance

As known to us all, Volvo experienced a tough and long period around 2008, just like other international car manufacturers from Europe and United States. However, after the change of its ownership from Ford to Geely in 2010, it seems that Volvo has the strength to bottom out. Although the struggle from Volvo did not give any remarkable feedbacks from 2010 to 2012, Volvo Cars appeared to be closer to a sustainable future, notching a modest sales gain in 2013 that could improve the company toward profitability.

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As seen from the table above, Volvo Cars reported a 1.4% rise in sales last year, as enormous gains in China over the second half of 2013 offset a continued decline in the United States. Volvo sold 61233 cars in the US, versus 61146 units sold in China in 2013.Despite a strong surge in China, the US market remained the biggest for Volvo in 2013.

While several bigger car manufacturers have converted growing global demand into the sizable profits, after returning from the global economic crisis, Volvo has appeared to be stuck in a lackluster performance in two of its primary markets: the United States and Europe. Sales in China grew 46%, while US sales declined 10% in 2013. Sales to European were essentially flat during the year, and sales in the company’s traditional home market of Sweden were up nearly 1%.

The decreasing of demand in the European market has limited Volvo’s growth opportunities. In addition, Volvo has been unable to grow in the United States. At the same time, Chief Executive Håkan Samuelsson ramped up the company’s focus on China, helping the company to meet its volume target.

However, Volvo’s performance contrasts sharply with record sales and strong growth at Germany’s premium auto makers like Audi, BMW, and Mercedes-Benz as well as the big three U.S. auto makers—GM, Ford, and Chrysler, which are all benefiting from the recovering North American car market (Pearson, 2014).

The Volvo S60 and XC60 were the two best sellers while the introduction of the new Drive-E engine family, with top class fuel economy, and the launch of the Volvo V60 are expected to bolster Volvo Cars’ position in the US market in 2014, Volvo said (Leggett, 2014).

As Volvo points out that although it is not expected that sales gain becomes as big in the years to come, China will still play an increasing part in the future of Volvo. So it is shown that Volvo’s expectations and ambitions on the increasing Chinese market so as to awake itself to the more competitive world as soon as possible.

Bibliography:

Leggett, D. 2014. Volvo Car global sales up 1.4% in 2013. [online] Available at: http://www.just-auto.com/news/volvo-car-global-sales-up-14-in-2013_id141683.aspx [Accessed: 13 Jan 2014].

Zander, C. 2014. Volvo Car gets huge boost from China. [online] Available at: http://online.wsj.com/news/articles/SB10001424052702303848104579310102957284632 [Accessed: 13 Jan 2014].

Pearson, D. 2014. Volvo Car Corp. returns to profit largely due to sales in China. [online] Available at: http://online.wsj.com/news/articles/SB10001424052702303595404579318843046835608 [Accessed: 13 Jan 2014].

Nordenstam, S. 2014. Volvo Cars returns to profit, aims for faster U.S. growth than market. [online] Available at: http://www.chicagotribune.com/classified/automotive/sns-rt-us-volvo-cars-20140113,0,441649.story [Accessed: 13 Jan 2014].

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