Volvo Cars had a record-breaking year in 2023 and reports the highest full-year retail sales, revenues and operating profit in its 97-year history.
A new all-time sales record of 708,716 cars enabled revenues to rise by 21 per cent to SEK 399.3 billion for the full year 2023. The underlying operating profit of SEK 25.6 billion, excluding joint ventures and associates, represents an increase of 43 per cent compared to 2022. The operating margin excluding JVs and associates came in at 6.4 per cent, up from 5.4 per cent in 2022.
The company sold 113,419 fully electric cars in 2023, an increase of 70 per cent versus 2022 and representing 16 per cent of its total global sales volume, which was one of the highest among all legacy premium carmakers. Compared to 2022, Volvo Cars increased its global electric market share by 34 per cent.
Its electric sales share is still based on only two fully electric models and does not yet reflect the full potential of the new EX30 small SUV, EX90 large SUV or EM90 MPV, all of which will hit the roads in earnest during 2024.
During the second half of 2023, Volvo Cars also saw gross profit margins on its electric cars increase fourfold versus the end of 2022 to 13 per cent. High lithium prices heavily affected its margins in 2022, but the company saw a clear uptick in the underlying profitability of these cars from the second half of 2023 as lower lithium prices and the effects of increased pricing materialised. The company also benefited from efficiencies from its own investments.
While there is still a gap in gross margins on the EVs compared to some of its combustion engine (ICE) cars, this gap is closing. The EX30 is set to deliver gross margins of 15-20 per cent and takes the company closer to that goal. Volvo Cars also expects the upcoming EX90 and EM90 to contribute to closing the gap between EV and ICE margins.
