Semiconductor shortage continues to wreak havoc on Volvo’s supply chain

Hitting record revenue until last year, the Geely owned, Sweden-based company Volvo Cars saw its sales and profits plummet in the last quarter owing to the global supply chain disruptions and the increased shortage of semiconductors witnessed by automakers in the second half of 2021.

As per an AFP report, Volvo stated the result was a year of two halves.

“During the first half, the market was up by double digits but abruptly stalled in the second half due to Covid-related shutdowns in South East Asia and other semiconductor-related production disturbances,” said the company.

Also read: Supply chain snags may cost automakers $210 billion this year

The automaker registered a drop in its retail sales of 20 percent to 1,68,000 units in the fourth quarter of the year, and the revenue drop was at a smaller rate of six percent. Revenue fell to 80 billion kronor ($8.6 billion, 7.5 billion euros) compared to the same quarter in 2020 and the net profit shrank by 60 percent to 2.3 billion kronor. However, Volvo added that the overall picture was brighter, with overall revenues jumping by seven percent to 282 billion kronor. And, the net profit soared to 14.2 billion kronor, nearly double the 2020 figure.

While the company witnessed a small fall, the strong demand had a positive effect on prices and sales of more expensive cars while interest in electric vehicles continued to grow globally.

Volvo informed its aim of selling only fully electric models by 2030 and said the share of sales of rechargeable vehicles, including plug-in hybrids, grew to 34 percent in the fourth quarter.

“Last year was a year that the company is proud of. Looking ahead, uncertainty is still high. While component shortage has eased somewhat, we expect the supply chain to remain a restraining factor.”

Hakan Samuelsson, Chief Executive Officer, Volvo Cars

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