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Sales falls for Saab and Volvo

Sweden’s carmakers are facing leaner times, with Volvo and Saab both suffering from sales falls in January as signals of an economic downturn mounted.

Published: 5 February 2008 18:48 CET

Volvo says it sold 33,425 cars worldwide in January, which is 4.9 percent fewer than in January 2007. Saab sold 7,991 cars during the same period, 11.8 percent fewer than in January last year.

Maria Bohlin, spokeswoman for Ford-owned Volvo Cars, said the falls should be seen in light of the fact that 2007 was a very good year. The company had its best-ever year last year, selling 458,323 cars worldwide.

In Europe, Volvo sold 19,810 cars in January, a fall of 10.7 percent.

“The markets are generally falling in Europe at the moment. Our competitors are also seeing falls. In 2007 we were the fastest-growing premium brand in Europe,” Bohlin said.

Sales for Volvo fell in Sweden and Germany – its two largest markets in Europe. The company sold 3,793 cars in Sweden (down 17.4 percent) in January and 1,950 in Germany (down 12.8 percent.

“Sure, it hurts, but we still have about 25 percent of the market in Sweden. Germany has been a weak market for us in the past few months,” said Bohlin.

Russia is now Volvo’s fifth biggest market. The company sold 21,000 cars there last year and sales in January rose 17.6 percent.

Sales in the US rose by 3.1 percent in January to 8,040 cars, despite the weak dollar and the sub-prime crisis.

“Sales are starting to take off thanks in part to the XC 70, which was launched in the autumn,” Bohlin said.

The US market was less promising for GM-owned Saab, which sold 1,772 cars in January, representing a fall of 24.3 percent.

Saab also experienced falls in the UK, France and Spain – the large diesel markets. Sales in the UK were down by 36.9 percent to 932 cars.

Saab spokesman Christer Nilsson said the company was hoping that its new turbo diesel, to be launched later this year, would give it a boost. The company’s sales in Sweden were in positive territory. Some 1,834 Saabs were sold in January on the company’s home market, an increase of 5.5 percent.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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