Cost-cutting measures being introduced by Volvo Cars for the second half of this year will have no effect on the operations of Volvo Car South Africa – these measure being introduced despite the fact the Swedish company reported record revenue for the first six months of 2019.
The SEK130,1-billion, up from SEK122,9-billion year-on-year and buoyed by the best first half-year sales performance in the company’s history.
For the first six months, sales amounted to a record 340 286 cars, a year-on-year increase of 7,3%. During the period, Volvo Cars grew consistently faster than the overall market.
The company has gained market share across the US, China and Europe, with the UK and Germany recording growth of 30% and 32% respectively. The overall passenger car market in the US declined by 2,0% in first half, while China and Europe fell by 9,3% and 3,1% respectively during the same period.
Håkan Samuelsson, president and chief executive, emphasised the company has prioritised growth and market share during the period, capitalising on the building momentum for the Volvo brand generated by an all-new line-up of award-winning models.
“At a time when most markets in the world see stagnating car sales, we have had strong growth in the first half,” he says. “We continue to take market share in all regions where we operate, but increased pricing pressure and tariffs have decreased our operating profit. The cost measures we took earlier this year will come into effect in the second half of the year.”
Volvo Cars has initiated additional cost measures within the company on top of already planned measures, which combined, aim to lower fixed costs by SEK2-billion. These actions will come into effect in the second half of the year and running into the first half of 2020.
For the remainder of the year, Volvo Cars expects continued growth in sales and revenue, boosted by continued strong demand for the fully renewed product portfolio as well as increased production capacity.
According to Greg Maruszewski, Managing Director of Volvo Car South Africa, these cost-cutting measures will have no impact on South Africa.
“We are not cutting jobs or drastically cutting costs either. We are in an extremely fortunate position in that, while the passenger car market in South Africa is declining (it fell by 3,2% in June 2019) as is the premium market (it fell by 19% in June 2019), we are growing both our volumes and our market share.
“This is due to both our product range – which has been comprehensively renewed – as well as our improved customer satisfaction results which has improved our overall appeal.”
“The Scandinavian styling, superior equipment specifications, efficient powertrains and exceptional safety features of our latest vehicles has seen them win accolades the world over; we have never had a better product line-up in the history of the company.”
While all models are selling well, the Volvo XC60 – 2018 World Car of the Year – is doing particularly well in South Africa.