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VOLVO

‘Bring back scrap bonus’: Volvo

The head of Volvo Cars has called on Sweden's government to help stimulate the auto industry by reintroducing a cash incentive scheme for scrapped cars.

Published: 28 January 2009 14:23 CET

“We want the government to act immediately … A car-scrapping premium has a double effect: old cars that pollute the environment twice as much as new ones disappear, and at the same time the car industry is stimulated and more people can keep their jobs,” chief executive Stephen Odell told financial daily Dagens Industri.

A number of European countries have already introduced cash-for-clunkers programmes, including Germany, France and Austria.

In Sweden, which has one of the oldest car parks in Europe, an incentive programme in 2007 for cars made before 1989 was so popular that the earmarked funds were used up immediately and it has not been reintroduced since then.

Odell also called for a government programme that offers new car buyers a 10,000-kronor ($1,250) rebate if they buy an environmentally-friendly car to be extended beyond 2009, when it is due to expire.

Sales of green cars have risen by 50 percent since the rebate was introduced in April 2007, and environmentally-friendly cars now represent a third of cars sold.

Those strong figures come despite the dire situation for the car industry.

According to the BIL Sweden association of carmakers, new car registrations plunged by 45 percent in December from a year earlier and by 17.3 percent for the full-year 2008.

Odell said Sweden was expected to see a 50 percent drop in car sales in January, in what he said was the most dramatic decrease in Europe.

BIL Sweden has forecast a 27 percent drop in car sales for 2009 from 2008.

VOLVO

Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Published: 3 February 2021 12:21 CET
Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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