The company is also continuing to invest heavily in the green transition and electric vehicles (EVs), despite concerns that EV demand in Europe may be tapering off now.
Automotive giant Volvo released its Q2 2024 earnings on Thursday morning, seeing operating earnings come in quite significantly above market expectations. However, the company still reduced its retail sales growth forecasts for 2024.
Volvo reported net sales of SEK 140.2 billion (€12.16 billion) for the second quarter this year, which was more or less the same as the corresponding quarter last year. Adjusted operating income was SEK 19.4 billion, down from SEK 21.9 billion in Q1 2024.
Similarly, the operating income margin also fell to 13.9% in Q2 2024, down from 15.4% in the same quarter in 2023. This was mainly due to falling volumes, as well as the company’s rising investments in research and development (R&D). However, the price rises, put into motion in 2023, managed to offset this lower margin somewhat.
Return on capital employed was still robust at 41.3%, up from 30.2% in Q2 2023.
The company also saw an 8% fall in truck deliveries in Q2, coming in at 58.935 trucks. Construction equipment sales also fell 19%. However, bus sales increased 22%. Total net sales for lorries was SEK 95.1 billion, the same as the corresponding quarter last year.
Moreover, the company decreased expectations for growth in retail sales this year to 12%-15%, instead of the previously announced 15%.
Volvo is also continuing to bet heavily on the green transition and electric vehicles, with considerable investment in biodiesel trucks.
Martin Lundstedt, president and chief executive officer (CEO) of Volvo said in the Q2 2024 earnings report: “We continued to take strides on our zero-emissions vehicle journey. Our line-up of biodiesel-powered trucks was expanded with a full range of new Volvo truck models that can run on 100% biodiesel. Furthermore, we announced that we are developing combustion engines running on green hydrogen.
“On-road tests will begin in 2026, and the commercial launch is planned towards the end of this decade. These trucks provide a significant step to decarbonise heavy transport. We also announced that we intend to form a joint venture together with Daimler Truck to become the leader of software-defined heavy-duty vehicle platforms.”
Volvo ties up with Daimler Truck
Volvo also recently announced that it had partnered with Daimler Truck to create a software-defined vehicle platform and truck operating system, which is expected to set the foundation for upcoming software-defined commercial vehicles.
This partnership will be a 50/50 one and will be based in Gothenburg, Sweden. The final joint venture agreement will be made this year, with the agreement expected to close by the first quarter of next year.
Regarding this partnership. Martin Daum, CEO of Daimler Truck said in a press release: “Just as important as the transformation towards CO2-neutral drive technologies is the digitalisation in the vehicle. Developing a common software-defined vehicle platform with Volvo Group will enable us to turn our vehicles into a programmable device.
“It will allow us to build differentiating digital vehicle features with significantly greater speed and efficiency for our truck and bus customers around the globe. Together with the Volvo Group, we can develop a benchmark truck operating system and set an industry standard.”
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