Q: What are your prospects for the remainder of 2021 and 2022?
A: This can be a troublesome query because of the scarcity of semiconductors. We had good momentum, after which coronavirus outbreaks within the Far East shut down a few of our element suppliers, together with these offering semiconductors. Because of this, we misplaced the manufacturing of round 50,000 automobiles.
We compensate for this by truly decreasing our stock ranges; due to this fact, the precise lack of data was round 30,000 in comparison with final yr. However now the inventory of the sellers may be very low as a result of they’ve bought every little thing they’d. The fourth quarter positively appears higher, so the manufacturing loss will likely be smaller, however any loss will lead to a loss in retail gross sales.
Total, issues will likely be higher within the final quarter of 2021, however they nonetheless will not get again to regular. By the primary quarter of subsequent yr, we must be again on monitor with solely minor disruption from the chip scarcity. It’s too early to say what this may imply for annual ends in 2022.
Will you continue to be capable of set a worldwide gross sales document in 2021 by surpassing the 705,452 Volvo automobiles bought in 2019?
It is shut at hand, but it surely will depend on how manufacturing points develop within the Far East. We’re shut, so perhaps we’ll have fun one other historic document. It isn’t unattainable.
What in regards to the purpose of 800,000 gross sales? Will this purpose be pushed again to 2022 or 2023?
Absoutely. We thought we have been roughly on monitor to get there as a result of after the primary half of this yr, once we added up the final 12 months of precise numbers (June 2020 to June 2021), we have been at round 775,000.
At this level you could possibly virtually spherical to 800,000. However since then we have now backed off as a result of we misplaced numerous manufacturing within the third quarter.
What are the indications that present the flea disaster is coming to an finish?
This may be seen in confirmed deliveries from suppliers. After struggling massive reductions within the third quarter, higher element volumes are coming. Because of this, we must shut our factories and cease manufacturing much less typically within the fourth quarter.
What’s the affect of the pandemic on companies?
Each day, right here in Sweden, we return to regular. You do not see anybody sporting masks, even once you journey throughout the nation by aircraft. Most individuals are again of their workplaces.
The massive drawback we have now with regards to doing enterprise is touring to america and China. China continues to be very remoted. We’ve not been there for nearly two years.
We plan to go to america within the subsequent few months. Whereas we have improved lots in distant conferences, generally you actually need to meet individuals head to head.
What impact does this have on the best way Volvo sells its automobiles?
We’re transferring to on-line promoting, direct promoting, and electrifying, and you’ll’t get individuals to make the swap by simply writing an e mail and asking them to get issues performed from right here. Monday.
It slows us down as we attempt to get everybody to know the objectives and execute the adjustments. The affect this has is unknown. However we’d most likely be additional forward if we did not have the restrictions.
I used to be actually pissed off that we have been unable to talk with our retailers head to head in lots of areas because of the restrictions.
Volvo desires half of all world gross sales to be made on-line by 2025. The place are we at? now?
We’re 5 to 10% within the markets the place we provide this. Germany is at virtually 10% and america at round 5%. We additionally provide on-line gross sales within the Netherlands, Sweden and Norway. As well as, all of our totally electrical automobiles will solely be bought on-line. At current, they characterize 3-4% of our gross sales. (Volvo’s purpose is for 50% of all world gross sales to be totally electrical by 2025.) We can have a big enhance in EV capability subsequent yr when we have now a full yr of gross sales of the C40.
One in every of your long-term objectives at Volvo was to have an working margin of 8-10%. Within the first half, thanks to higher pricing, the margin was 9.4%. How sustainable is that this stage of profitability?
As for this yr, we’ll return to pre-coronavirus ranges, which is a margin of round 5-6%, as we had in 2019 (when the full-year margin was 5.2 %). From there, we’ll transfer ahead. By the center of the last decade it must be 8-10 p.c, so we must be round 3 proportion factors higher.
How will you do that, particularly when switching to completely electrical automobiles? will initially add prices?
Now we have to compensate for this value by growing extra inexpensive automobiles, which incorporates using widespread architectures throughout the Geely group and likewise by simplifying the automotive. This can occur as a result of with electrical automobiles we’ll not want issues like gasoline tanks and motors.
The purpose is that by the center of the last decade, the price of producing an electrical automotive matches the price of manufacturing a light hybrid immediately.
However that doesn’t give us any enchancment in profitability. Because of this it’s essential to discover a extra environment friendly approach to distribute and promote automobiles. That is an space the place we are able to actually enhance. This can embrace clear and constant pricing to keep away from inside competitors and reductions. We additionally desire a less complicated product providing, which can enable us to higher handle our inventory and cut back funding prices. All of this could enhance profitability.
Does itemizing the corporate on the inventory market assist enhance your profitability?
Very not directly. When you need to clarify your technique to buyers, you change into extra particular. The sensible questions that have been requested through the registration course of have been very useful. Additionally, being pressured to report the place you might be on a quarterly foundation is a little bit of a ache once you’re performing poorly, but it surely’s a chance to elucidate what you are going to do to be higher sooner or later. The examination is sweet.
As well as, the itemizing makes the corporate somewhat extra engaging as we attempt to develop our experience, for instance within the space of software program. Folks typically prefer to work for a publicly traded firm the place they’ve the chance to purchase shares and be enrolled in a inventory bonus program.
Volvo has aggressively launched into plug-in hybrids, however now the transition to full electrification has accelerated, particularly in Europe. In the event you might begin over, would you focus extra on battery-electric automobiles and fewer on plug-in hybrids?
Provided that we had identified 5 years in the past that the charging community can be adequate immediately. This doesn’t occur. Subsequently, plug-in hybrids have been a needed intermediate step.
I feel in the long term there will likely be only a few plug-in hybrids, however that may solely occur when we have now a sufficiently giant charging infrastructure.
On the constructive facet, round 40 p.c of our gross sales in Europe are plug-in hybrids. It’s a step in direction of electrification. All of those clients are nearer to switching to a completely electrical automotive than if they’d purchased one other diesel. Subsequently, we made the suitable determination.