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Volvo Car AB (publ): Volvo Cars outlines clear roadmap to long-term profitability and cash generation
Volvo Cars will today, during an event in Stockholm, reveal the strategic steps to long-term build a company capable of an EBIT margin beyond 8 per cent with strong cash flows.
The company will outline clear strategic answers to the car industry's challenges: regionalised product offers and governance model, focus on growth through flexible electrification, leveraging the unique synergies with Geely, and a transformation from selling cars to delivering complete customer offers.
As part of its Strategy Update, Volvo Cars will unveil its largest-ever product offensive, with 13 new and regionally tailored electrified cars. As markets increasingly deglobalise through technology restrictions, trade tariffs and diverging customer preferences, Volvo Cars is turning regionalisation into a competitive advantage.
As the seven new cars for Western markets will benefit from investments already made in the SPA2 and SPA3 platforms, the product push means that investments in technology and manufacturing will decrease from today's levels. In China, Volvo Cars will leverage its unique synergy potential through shared platforms, a software stack for China as well as common parts and a common supply chain to develop six all new China-specific models.
As a result, Volvo Cars estimates that many of its upcoming models will require much lower investment per car, compared to previous first-car-on-platform launches such as the EX60. And as more electrified cars move to SPA-based or shared hybrid platforms, profit margins per car will increase significantly as well.
The company also expects additional savings from synergies with Geely for hardware sourcing in Europe and China. By 2030, Volvo Cars aims to achieve around 30 per cent full commonality in parts, up from 10 per cent currently. The company estimates this to contribute approximately 5 per cent of material cost savings by 2030, beyond generating additional indirect savings.
It will also continue to improve efficiency by making corporate overhead leaner and strengthening productivity across the value chain. Combined with the strategic actions announced today, these measures create a clear roadmap towards building a company with growth, stronger profitability and cash generation.
"The challenges for the car industry are immense, but our strategy gives a clear answer to how we adapt to these and our ambition is to be the leading premium car brand," says Håkan Samuelsson, president and CEO. "With a regionally optimised product portfolio, unique synergies, electrification and new levels of efficiency, we will build a company capable of reaching beyond 8 per cent EBIT margins."
The Volvo Cars Strategy Update, an event for investors and media in Stockholm, takes place between 9-12 CET and will be livestreamed online here.