Volvo Cars sees 18% decline in global sales in December amid chip shortage
Volvo Car Group global sales declined 18.1% last month at 64,436 units amid a pressure mounted by lingering global component shortage. The company, which had warned that the chip shortage would continue into 2022, has been heavily impacted by sector-wide supply-chain constraints.
Volvo Cars' sales in Europe dropped 15.1% in December last year while they fell 26.7% in the US.
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"The result was significantly influenced by continued component supply shortages, which affected production and consequently deliveries to customers," Volvo said in a statement. However, the company added that the demand for its products remained strong.
Through last year, the company's total sales grew 5.6% to 698,693 cars, of which 27% were Recharge models with a fully electric or plug-in hybrid powertrain. In its 2021 full-year outlook, the company expects for sales volume and revenue growth with improved profitability to pre-pandemic levels. Volvo is due to post fourth-quarter earnings on February 11.
In October last year, the company, which is majority owned by China's Geely Holding, listed on Nasdaq Stockholm after wrapping up Europe's biggest IPO of the year.
To deal with present and future supply chain disruptions and to scale up its manufacturing, Volvo recently signed a deal with microchip manufacturer Qualcomm Corp to supply chips for its vehicles. The chip procurement deals come at a time when the auto industry around the world is suffering a major crisis due to a semiconductor shortage.
The deal will allow Volvo’s electric SUV, which is set to enter production this year, to tap into hands-free use of Google Assistant and navigation with Google Maps. Also, these chips enable the cars' software to be upgraded through over-the-air (OTA) updates.
Qualcomm has also created a new chip and system for computer vision, which uses cameras on the car and artificial intelligence to help with safety functions like automatic lane control.
(with inputs from Reuters)