Volvo: profit margins, not volume, to drive revenue growth

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Volvo’s premium, high-priced products will drive revenue rather than volume production.

That was the trade forecast made by the automaker’s chairman and chief executive, Martin Lundstedt, at the Volvo Group’s annual capital markets day. Lundstedt says the ongoing technology shift to electrification should accelerate the group’s earnings growth, primarily because profit margins for electric vehicles are better than those for ICE vehicles, and the market appears capable of accepting higher prices. high detail.

Volvo executives say electric vehicles have the potential to increase total vehicle and service revenue per unit by more than 50% over the life cycle. The automaker sees its role as an early adopter of electrification as an asset to gain market share, while offering a wider range of services that should also drive revenue growth.

However, Lundstedt says Volvo recognizes financial challenges remain along the way. He says: “Climate change is the challenge of our generation. At the same time, the demand for transport and infrastructure continues to grow and we need to meet this demand with more sustainable solutions.

“In this changing landscape, we can lead the transformation and add value to our customers and embark the Volvo Group on a growth trajectory driven by electrification, autonomous solutions and new productivity services. We are geared towards growth.

Lundstedt also highlights the company’s ability to maximize profitability by focusing on modular vehicle platforms: “Our modular vehicle architectures will continue to serve us well, creating flexibility as well as cost and capital savings. in R&D and the industrial system as we navigate the transition to electric and autonomous vehicles.

“We invest to win.”

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