Volvo Car AB said retail sales this year will be flat or slightly lower than 2021 after semiconductor shortages and Covid lockdowns continued to weigh on production in the second quarter.
Retail sales declined 27% in the three months through June as Covid lockdowns in China and persistent supply-chain lags cut deliveries, Volvo said Wednesday. Previously the Swedish carmaker predicted some growth in deliveries this year.
Operating income during the second quarter came in at 10.8 billion kronor ($1.1 billion), boosted by proceeds from the listing of electric-vehicle unit Polestar. The company’s shares fell as much as 5.8% in early trading.
Carmakers are struggling to grow sales as ongoing supply-chain jams and a souring economic outlook weigh on the industry. Volvo Cars, which aims to produce only electric vehicles by 2030, has bet its more aggressive transition away from internal combustion engines will drive profitability.
Echoing other carmakers, Volvo Cars said it saw an improvement in supply chains late in the second quarter, helping production resume. Yet, due to the lag between production and retail deliveries, the improvements won’t be felt in this year’s sales results, the carmaker said.
Read more: Carmakers Feel Chip Crisis Easing as Global Growth Slows
“We are largely through those supply constraints that we saw in the first quarter,” Chief Executive Officer Jim Rowan said, noting that a shortage of a specific semiconductor hampered the carmaker.
Rowan added that lockdowns in China significantly changed the outlook: “We never foresaw it would last so long.”
Read more: Europe Car Sales Slump to Worst June in Decades on Supply Issues
“It’s not where we want to be longer term,” Rowan said. “But given the turbulence that we’ve been navigating in the second quarter, I think it’s a decent foundation we can build on once we get back to full supply.”
