Volvo Cars Surpasses Earnings Estimates But Lowers Sales Growth Forecast

Swedish automaker Volvo Cars reported higher-than-expected second-quarter earnings but adjusted its 2024 retail sales growth forecast due to a slowdown in the industry. Despite robust electric vehicle sales, the company now expects a 12-15% growth. CEO Jim Rowan remains optimistic about improving margins.

Swedish automaker Volvo Cars reported second-quarter operating earnings well above estimates on Thursday, even as it lowered its 2024 retail sales growth forecast due to an industry-wide slowdown.

The stakes are high for automakers and suppliers who have long been betting on increasing demand for electric vehicles. The industry is now facing slowing sales while investments in capacity and technology development outpace demand, putting companies under pressure to cut costs.

Despite warning signs throughout the year about slowing electric car demand, Volvo Cars has reported strong EV sales lately. However, on Thursday, the company adjusted its growth forecast for full-year retail sales to 12%-15%, down from the previously expected 15%.

Volvo Cars' operating income, which includes the impact from its stake in the loss-making Polestar, rose to 8 billion crowns ($758.4 million) from 5 billion crowns a year ago. This exceeded the 6.7 billion crowns expected by analysts, based on LSEG data.

Excluding joint ventures and associates, the company's operating income rose to 8.2 billion crowns in the quarter, up from 6.4 billion a year ago. The battery electric vehicle (BEV) gross margins increased to 20% from 16% in the previous quarter, supporting CEO Jim Rowan's confidence that margins will continue to improve. ($1 = 10.5490 Swedish crowns)

(With inputs from agencies.)