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Why Is Volvo Losing Profit Even Though It' s Selling More Cars

Apr. 27, 2019 9:20 AM ET by Jared Rosenholtz / 4 Comments Here's a hint: you've been hearing about these a lot lately. With automakers now reporting their first-quarter earnings and sales figures, Swedish company Volvo has a lot to celebrate. Volvo's sales rose 9.4% to 161,320 units while net revenue also increased by 10.7% compared to Q1 2018. So why then is Volvo still unhappy after these results? Even though the automaker sold more cars and brought in more revenue, its operating profit decreased by 19.3%, its net income decreased by 21.6%, and its earnings before interest and taxes (EBIT) went from 6.4% to just 4.6%. So what was the cause of Volvo's lost earnings? As we feared, tariffs have severely hurt Volvo's bottom line. Volvo Volvo Volvo CEO Hakan Samuelsson issued a statement on the company's Q1 results: "The sales growth in the first quarter proves the appeal of Volvo Cars' product portfolio. We grew in all three regions and revenue continued to rise faster than volumes. Compared with last year, profitability was affected by higher tariffs and increased price pressure in many markets." We've already seen Volvo shuffle its production to avoid being hit with tariffs from the Trump Administration. Volvo just opened a new factory in South Carolina to build the new S60 but it still builds some of its cars in China, which are now subject to tariffs. Volvo Volvo Volvo It doesn't seem like the tariff threat will end any time soon, so Volvo will have to rely more heavily on its manufacturing centers in America and Sweden. Volvo still believes it will see "continued growth in sales and revenue" in 2019 but still "expects market conditions to put continued pressure on margins." After being purchased by Chinese automaker Geely in 2010, Volvo has completely turned itself around but that momentum may be heavily stymied unless the US reaches an agreement on trade. Volvo Volvo

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Volvo S60 Jared Rosenholtz Editor-at-Large After graduating with an MBA, Jared pursued his love of cars by becoming an automotive journalist. An internship with CarBuzz grew into his current position as Editor At Large. Jared now spends most of his time evaluating new vehicles and chasing the latest news stories in the automotive industry. When he’s not attending Cars & Coffee events on the weekend, Jared loves to watch NFL football and cruise around with the top down in his German convertible. Contact Jared @Carsnbites @jar_rosenholtz LoginSign Up Home News Features Car Reviews Car Advice 2021 CarBuzz Awards New Cars Used Cars Future Cars Compare Cars Sell My Car Car Dealerships Buy Here Pay Here Used Car Reviews Popular Tags Cars # Video # TOP # Spy Shots # Reveal # Rumor # Auto Show # Supercar # Tuning # Car Culture # Industry News # Motorsport Acura Alfa Romeo Aston Martin Audi Bentley BMW Bollinger Bugatti Buick Cadillac Caterham Chevrolet Chrysler Dodge Ferrari Fiat Fisker Ford Genesis GMC Hennessey Honda Hyundai Infiniti Jaguar Jeep Karma Kia Koenigsegg Lamborghini Land Rover Lexus Lincoln Lordstown Lotus Lucid Motors Maserati Mazda McLaren Mercedes-Benz Mini Mitsubishi Nissan Pagani Polestar Porsche Ram Rimac Rivian Rolls-Royce Spyker Subaru Tesla Toyota Volkswagen Volvo By Make Acura Alfa Romeo Aston Martin Audi Bentley BMW Bollinger Bugatti Buick Cadillac Caterham Chevrolet Chrysler Dodge Ferrari Fiat Fisker Ford Genesis GMC Hennessey Honda Hyundai Infiniti Jaguar Jeep Karma Kia Koenigsegg Lamborghini Land Rover Lexus Lincoln Lordstown Lotus Lucid Motors Maserati Mazda McLaren Mercedes-Benz Mini Mitsubishi Nissan Pagani Polestar Porsche Ram Rimac Rivian Rolls-Royce Spyker Subaru Tesla Toyota Volkswagen Volvo By Car Type SUVs Crossovers Sedans Coupes Trucks Sports Cars Wagons Vans Hatchbacks Convertibles Small Cars Luxury Cars Electric Cars Hybrid Cars Future Cars By Price Up to $15K $15K - $25K $25K - $35K $35K - $45K $45K - $55K $55K - $75K $75K - $100K $100K - $200K $200K - $300K Above $300K Back To Top