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2024 KTM 500EXC-F DUAL-SPORT: FULL TEST

In the bike biz, there are many methods to measure success. If you might be speaking models offered, income and inventory worth, it’s one factor. If you’re speaking desires, ardour and efficiency, it’s fairly one thing else. Right now, KTM is on prime of the dual-sport phrase for real-world fanatics. For a protracted, very long time, the KTM 500EXC has been capable of set the bar for each efficiency and worth in that section. This 12 months the KTM 500EXC has undergone a big change. The body is new, the suspension is new and far of the motor is new. Now, the rank and file of the dual-sport world has to reconvene and determine whether or not or to not elect a brand new chief. The votes are nonetheless being tallied.

KTM hasn’t been shy about pushing dual-sport bike costs greater than ever. The 2024 500EXC sells for $12,949.

WHY CHANGE?

Unlike most different bike corporations, the wall between the racing division and the manufacturing division is paper skinny. In normal, the bikes that the corporate races on the professional degree are carefully associated to the bikes which are offered in each KTM dealership. That’s not solely true for the motocross bikes, however there’s a trickle-down impact for path and dual-sport bikes as properly. So, in KTM’s long-term plan, the adjustments that had been applied for the 2022 Factory Edition motocross bikes had been to unfold to the usual motocross bikes in 2023 and to the dual-sport/path bike in 2024. Thus, the brand new 500EXC has adjustments that had been impressed by Supercross bikes.

To be honest, that’s a little bit of simplification. The 500EXC doesn’t have the identical body because the motocross bike. The most evident distinction is that it makes use of PDS rear suspension with out linkage. But, the body design from the shock ahead could be very very similar to that of the SX-F. Likewise, the adjustments to the engine, bodywork and general format are just like the present motocross line. Additionally, the EXC has a really important suspension change. The fork is now a premium-level WP Xact fork slightly than the extra budget-driven Xplor unit. The new fork is similar to what comes on the present motocross/cross-country fashions, however makes use of metal coil springs slightly than air.

The EXC stays a real dual-sport bike that’s blessed by the EPA, DOT, CARB and the authorities in all 50 states. That means it’s quiet and clear. It additionally implies that the top person just isn’t supposed to switch the motor, airbox or gasoline system. Thankfully, there’s no method this may be policed aside from fix-it tickets issued by native authorities. For aftermarket corporations it’s a unique story; they’ll and have been fined for providing non-compliant equipment. The California Air Resources Board hasn’t been shy about utilizing this tactic, however more and more, the EPA has been getting in on the act on a nationwide foundation. The backside line is that getting extra efficiency out of a professional dual-sport is a shady enterprise. That’s one motive why KTM sport bikes are so extremely desired. The EXC line has a historical past of first rate efficiency regardless of the assorted bureaucratic obstacles.

For 2024, the EXC has stiffer suspension, however nonetheless loves its trails tight and nasty.

A NEW DEAL

So, how properly does a inventory KTM 500EXC motor carry out? It’s fairly darn good. To put a quantity on it, a box-stock 500EXC produces greater than 40 horsepower. That’s about the identical as a present 250F motocross bike. The distinction is that the EXC will get to that degree with torque slightly than revs. The 500 begins making energy at 4,000 rpm and stops revving at 9,000 rpm, whereas a 250’s prime zone is from 8,000 to 12,000 rpm. So, once you’re on the path and also you come to a giant, ugly hill, you don’t should downshift or abuse the clutch. You open the throttle, it goes up the hill. End of story. In fact, the one motive anybody ever needs extra energy is once they take the EXC out of its major surroundings. This is a path bike first and a avenue bike second. It’s not a race bike. The truth that folks race them is inappropriate. KTM really makes different variations of the identical bike which are extra acceptable for that. The 500XC-W is mainly an EXC with out the DOT lighting and emission stuff. The 500XW-F is one other model with out DOT lighting, however it nonetheless has many of the emission stuff in order that it’s eligible for a California inexperienced sticker.

KTM’s dual-sport bikes nonetheless use Brembo brakes at each ends.

The motor adjustments for 2024 end in a barely extra responsive energy supply and maybe slightly extra meat on prime, however it’s not important sufficient to warrant a trade-in. The chassis adjustments are extra dramatic. If you’ve been paying consideration, you in all probability know that the brand new frames for the SX fashions have drawn criticism for being too inflexible. If it was too inflexible for Supercross, that appears like it will be a horrible transfer for a dual-sport bike, proper? Actually, the suspension is so utterly totally different for the EXC that the body rigidity isn’t a big issue. Hard-core PDS followers will like it as a lot as ever, however any body change has been misplaced within the transfer from a progressive 63/69 N/mm spring to a straight 72 N/mm spring. In entrance, the brand new fork nonetheless has a 4.6 N/mm spring set, however the damping traits are utterly totally different—and stiffer.

The PDS no-link rear shock obtained a straight-rate spring this 12 months.

When you set all that collectively, it’s inevitable that the EXC is stiffer general, however solely in a great way. Suspension motion was a limiting issue with the earlier mannequin. It was nice in rocks and tight, twisty chaos, however it will dive and wallow in whoops. At excessive pace, even reasonable braking would end in fork dive in entrance and shock unloading within the rear. The new bike is way more secure at pace. In slow-speed sections, it’s nonetheless extra compliant than most bikes. You nonetheless have wonderful floor clearance because of the lack of linkage, and you continue to have all of the traits which have made PDS suspension so common within the off-road world. Now, nonetheless, the bike works in a broader vary of terrain and situations.

KTM is as quiet and clear as they arrive, however has efficiency that has grow to be the first affect within the dual-sport world.

NEW AND OLD

We anticipated the brand new bike to be slightly heavier this 12 months, as a result of that’s what occurred to all the opposite KTMs that obtained the brand new body. On our scale, it’s 246 kilos with out gasoline, which is 2 kilos greater than final 12 months. No huge deal. We had been hoping that KTM may equip the bike with new rubber for 2024, however no such luck. We left the inventory Continental TKC80s on the bike so long as we might, however the darn issues by no means appeared to wear down. Eventually, we put in full knobbies and life obtained significantly better. When you do this, it’s a must to set up rim locks as properly. KTM is aware of that and offers you a set within the toolkit. If you intend on using lengthy pavement stretches, you’ll in all probability wish to stability the wheels as properly. Other issues on the we’re-not-fans listing embrace the truth that you possibly can’t regulate the lever place very far as a result of the handlebar switches take up an excessive amount of house, the infernal push-button fuel cap is as onerous to open as ever, and the mirrors are all the time in the way in which and onerous to regulate. On the opposite aspect of the ledger, the headlight is far brighter, the license-plate bracket is extra sturdy, and {the electrical} switches are improved.

When you tally up the rating card, the 2024 KTM 500EXC is measurably improved over final 12 months’s mannequin. Considering that the bike was already probably the most desired and talked-about dual-sport bike, that implies that KTM will proceed to name the pictures within the dual-sport world. The EXC has earned its place on prime.

Motorsport

Mercedes Throws Shade At BMW For ‘Nickeling And Diming’ Customers With Subscriptions

Subscriptions are a comparatively new income stream for automakers. Much like shopping for downloadable content material for a online game, in-car subscriptions help you add options to your automobile after you’ve got already purchased it.

Mercedes-Benz affords plenty of in-car subscriptions. But the agency’s Chief Software Officer, Magnus Ostberg, threw shade at BMW in an interview with Top Gear journal about BMW’s choice to cost further for heated seats.

Mercedes has a unique method by providing a “luxury and holistic experience” with out “nickeling and diming our customers,” Ostberg says. He went on to confess that Mercedes affords subscription packages however their shoppers “don’t want to be nickel and dimed in their face.”

2023 Mercedes AMG EQS

In 2022, BMW made the headlines for all of the improper causes. It began providing a subscription plan for heated seats. Obviously, the automobile already had the required {hardware} from the manufacturing unit, however it was blocked behind a paywall. Those who bought a automobile with out ticking the heated seats field might unlock the performance after taking supply. Following backlash and low acceptance charge, the controversial subscription was dropped. However, the Munich marque nonetheless affords loads of different pay-to-use options.

Mercedes additionally sparked controversy again in 2021 when it launched a subscription plan for the extra superior rear-wheel-steering system of the EQS. As normal, the luxurious sedan has a 4.5-degree steering angle on the rear in some markets, however homeowners pays further for the total 10-degree steering. It’s price noting the extra subtle system is normal on the EQS bought within the United States. Lest we neglect the subscription to access more power from select EQ models.

As to what different options you will get post-purchase, each automakers supply loads of goodies. Mercedes has an Excellence Package with 22 “digital extras” corresponding to auxiliary heating/air flow, distant door locking/unlocking, and distant window/sunroof management. You also can pay further for digital radio, headlights with an adaptive excessive beam, adaptive cruise management, and others. The full list is accessible here, however availability will depend on the nation, mannequin, and whether or not the automobile already has sure {hardware} put in.

BMW i5 M60 xDrive Touring (2024)

BMW has quite a few gadgets in its UK shop. The Bavarian model affords adaptive cruise management and high-beam help, plus Apple CarPlay integration and adaptive M suspension. There are additionally subscriptions to map updates and pretend engine sounds, together with packages that bundle sure driver help and security programs. We ought to point out that some gadgets can be found with month-to-month or yearly plans whereas others are a one-time charge to unlock the function completely.

Automakers imagine subscriptions will blossom into big money-making instruments. Stellantis estimates it will earn an extra €4 billion annually by 2026 with its “monetizable connected cars,” rising to €20 billion yearly by the top of the last decade.

Paying to entry a function that requires {hardware} already contained in the automobile is a tricky capsule to swallow. Nevertheless, it appears automakers are assured persons are going to pony up the cash every month or 12 months to make use of a performance intentionally blocked by the automobile producer. A survey performed by S&P Global Mobility final 12 months revealed 82 % of the respondents had been willing to get a subscription.

VolvoCars

Volvo Cars 2023 revenue will increase by 43 per cent to ship a document 12 months within the firm’s 97-year historical past

Full 12 months 2023 

  • 2023 income was SEK 399.3 bn (SEK 330.1 bn in 2022)
  • 2023 working revenue (excl. JVs and associates) was SEK 25.6 bn (SEK 17.9 bn in 2022)
  • 2023 working revenue was SEK 19.9 bn (SEK 22.3 bn in 2022)
  • 2023 EBIT margin (excl. JVs and associates) was 6.4 per cent (5.4 per cent in 2022)
  • 2023 EBIT margin was 5.0 per cent (6.8 per cent in 2022)
  • 2023 primary earnings per share was SEK 4.38 (SEK 5.23 in 2022)
  • 2023 absolutely electrical automobile gross sales share at 16 per cent (11 per cent in 2022)

Quarter 4, 2023

  • This fall income was 109.4 bn SEK (105.2 bn SEK in This fall 2022)
  • This fall working revenue (excl. JVs and associates) was SEK 6.7 bn (SEK 3.9 bn in 2022)
  • This fall working revenue was 5.4 bn SEK (3.4 bn SEK in This fall 2022)
  • This fall EBIT margin (excl. JVs and associates) was 6.1 per cent (3.7 per cent in This fall 2022)
  • This fall EBIT margin was 4.9 per cent (3.3 per cent in This fall 2022)
  • This fall primary earnings per share was 1.04 SEK (0.82 SEK in This fall 2022)
  • This fall absolutely electrical automobile gross sales share at 16 per cent (18 per cent in This fall 2022)

Events after the interval

  • Polestar is coming into an thrilling section with a strengthened marketing strategy and positioned for future progress.
  • Volvo Cars’ focus is on growing and concentrating its sources by itself formidable journey.
  • Volvo Cars is evaluating a possible adjustment to its shareholding in Polestar, which can end in Geely Sweden Holdings changing into a big new shareholder.
  • Geely will proceed to offer full operational and monetary assist to Polestar going ahead.
  • As a outcome, Volvo Cars will not present additional funding to Polestar. Volvo Cars will, nevertheless, lengthen the reimbursement interval for the present convertible mortgage by 18 months to the tip of 2028.
  • Volvo Cars’ and Polestar’s robust operational collaboration throughout R&D, manufacturing, aftersales and business continues to the good thing about each corporations.

 

Volvo Cars had a record-breaking 12 months in 2023 and right now studies the very best full-year retail gross sales, revenues and working revenue in its 97-year historical past.

A brand new all-time gross sales document of 708,716 automobiles enabled revenues to rise by 21 per cent to SEK 399.3 billion for the total 12 months 2023. The underlying working revenue of SEK 25.6 billion, excluding joint ventures and associates, represents a rise of 43 per cent in contrast with 2022. The working margin excluding JVs and associates got here in at 6.4 per cent, up from 5.4 per cent in 2022.

“2023 was a key milestone in our transformation journey,” mentioned Jim Rowan, Chief Executive of Volvo Cars. “We delivered a record-breaking year on many levels, reporting the highest retail sales, revenues and profits in our company’s 97-year history. We also took several significant steps forward in our ongoing transformation, while navigating a complex external environment. In doing so, we’ve built a solid foundation for 2024 and the years ahead.”

The full CEO letter by Jim Rowan, with extra particulars on the previous 12 months and the years forward, is included within the interim report for the interval and will be found here.

The 2023 outcomes exhibit Volvo Cars’ capacity to keep up premium pricing all year long, in addition to strong demand for its automobiles and a sturdy orderbook, regardless of ongoing market turbulence.

The efficiency additionally demonstrates the power of the corporate’s electrified product portfolio, which accommodates each electrical automobiles in addition to an in depth vary of plug-in and mild-hybrid fashions. These hybrid fashions represented a big majority of the corporate’s complete international gross sales in 2023 and can stay a key factor of its portfolio for the approaching years.

The firm bought 113,419 absolutely electrical automobiles in 2023, a rise of 70 per cent versus 2022 and representing 16 per cent of its complete international gross sales quantity, which was one of many highest amongst all legacy premium carmakers. Compared with 2022, Volvo Cars elevated its international electrical market share by 34 per cent.

Its electrical gross sales share remains to be primarily based on solely two absolutely electrical fashions and doesn’t but mirror the total potential of the brand new EX30 small SUV, EX90 massive SUV or EM90 MPV, all of which is able to hit the roads in earnest throughout 2024. 

During the second half of 2023, Volvo Cars additionally noticed gross revenue margins on its electrical automobiles enhance fourfold versus the tip of 2022 to 13 per cent. High lithium costs closely affected its margins in 2022, however the firm noticed a transparent uptick within the underlying profitability of those automobiles from the second half of 2023 as decrease lithium costs and the consequences of elevated pricing materialised. The firm additionally benefited from efficiencies from its personal investments.

While there’s nonetheless a niche in gross margins on the EVs in comparison with a few of its combustion engine (ICE) automobiles, this hole is closing. The EX30 is about to ship gross margins of 15-20 per cent and takes the corporate nearer to that objective. Volvo Cars additionally expects the upcoming EX90 and EM90 to contribute to closing the hole between EV and ICE margins.

Looking forward to 2024
2024 is about to be one other large 12 months for Volvo Cars because it continues to spice up its product portfolio and speed up its transformation in direction of changing into a totally electrical automobile maker by 2030.

At the tip of the fourth quarter of 2023, the primary prospects took supply of the brand new EX30 small SUV. This 12 months, Volvo Cars is targeted on rapidly ramping up manufacturing of this automobile and assembly the robust buyer demand, which has exceeded expectations. The firm can also be working laborious so as to add EX30 manufacturing to its Ghent plant in Belgium.

In the primary half of 2024, the corporate will begin manufacturing of its new EX90 flagship SUV, with buyer deliveries beginning quickly after. The EX90 represents a significant know-how leap with the introduction of Volvo Cars’ next-generation absolutely electrical platform upon which the automobile is constructed. 

As one of many first automobiles filled with core computing know-how, the software-defined EX90 represents a big paradigm shift for Volvo Cars. It is a automobile that brings next-generation security, connectivity, knowledge and software program all collectively in a single product, and reaffirms the corporate’s place as an business chief within the ongoing know-how transition.

The absolutely electrical EM90 MPV, which Volvo Cars revealed in China in November, has additionally began manufacturing. Like the EX90, the EM90 is a vital automobile for China and exhibits how critical the corporate is about succeeding in that market and taking market share. 

Together, these three new absolutely electrical automobiles will considerably increase Volvo Cars’ product providing across the globe and profitably take it into new demographics and market segments that it has not been energetic in earlier than.

On prime of that, Volvo Cars will refresh its plug-in hybrid automobiles, that are an vital bridge in direction of full electrification. Together with its absolutely electrical automobiles, this creates a broad and enticing Volvo Cars portfolio for right now’s international market. 

Volvo Cars expects it will enhance progress from 2024 and can considerably enhance its share of absolutely electrical automobiles versus 2023. In addition, the brand new electrical fashions will assist it to additional shut the margin hole between electrical automobiles and inside combustion engine automobiles in 2024. In phrases of complete 2024 retail gross sales, the corporate goals for a better year-over-year progress fee than in 2023.

“It is my firm belief that the hard work we have put in during 2022 and 2023 positions us to meet our objectives for the years ahead,” mentioned Jim Rowan. “Our strategy is well defined and unambiguous, and is the right one for Volvo Cars, our customers and the environment. Our results, order book and key performance metrics prove as much, and our customers clearly like what they see.”

A decisive transformation section 
Volvo Cars is now coming into a decisive section in its transformation journey. Not solely will it proceed to roll out and ramp up manufacturing of the EX30, EX90 and EM90 in 2024, however the firm can also be considerably ramping up different investments that may assist it change into a pacesetter in next-generation mobility. 

In the interval up till 2025, Volvo Cars will make the required structural and strategic investments that lay the technical basis for its future success: electrification, software program, core computing architectures, superior connectivity, knowledge seize and analytics, mega casting, next-generation e-motor and battery know-how, good cabin know-how, and a brand new superior manufacturing facility.

This will imply a short lived rise in funding ranges, but these strategically essential investments will drive vital value efficiencies in Volvo Cars’ subsequent era of absolutely electrical automobiles. They lay the muse for additional worthwhile progress and elevated EV margins.

The firm has a robust steadiness sheet supporting the transformative investments, with a liquidity place of SEK 75 bn as of year-end 2023, and throughout the funding section in 2024-25 it expects the free money stream era to be comparatively impartial.

From 2026 and onwards, Volvo Cars not solely expects the extent of investments to say no however to reap the advantages of this technique with greater progress and profitability. It will even at this level generate a robust optimistic free money stream. 

As the corporate accelerates its transformation, it is going to put much more emphasis on driving worthwhile progress over time and prioritising worth over quantity. It will double down on inside effectivity, guarantee sturdy capital allocation throughout our enterprise and capitalise on its section one investments.

Polestar replace
Polestar is coming into the subsequent thrilling section of its journey with a strengthened marketing strategy and value actions, added expertise to its government administration crew and board of administrators, in addition to the upcoming rollout of Polestar 3 and Polestar 4. This mixture positions Polestar effectively for future progress.  

As we transfer into the subsequent section of our transformation, together with deploying large-scale investments within the creation and adoption of latest applied sciences and future-fit manufacturing services, our focus is on growing Volvo Cars and concentrating our sources on our personal formidable journey.  

We are subsequently evaluating a possible adjustment to Volvo Cars’ shareholding in Polestar, together with a distribution of shares to Volvo Cars shareholders. This could end in Geely Sweden Holdings changing into a big new shareholder.  

Geely will proceed to offer full operational and monetary assist to Polestar going ahead, and, in consequence, Volvo Cars will not present additional funding to Polestar. We will, nevertheless, lengthen the reimbursement interval for the present convertible mortgage by 18 months to the tip of 2028. This will probably be topic to related approvals and additional info will probably be supplied in the end. 

Volvo Cars’ and Polestar’s robust operational collaboration throughout R&D, manufacturing, aftersales and business will proceed to the profit of each corporations.

Clarified ambitions
In gentle of those plans, Volvo Cars has determined to make clear its ambitions that have been set out at its IPO. The firm stands agency on its technique round electrification and technological management, one of the formidable within the business. Yet by clarifying its ambitions with sharpened metrics, it improves transparency and permits for a greater follow-up on its progress. 

The firm stays agency on its ambition to report an EBIT margin above 8 per cent for 2026, and now achieve this primarily based on anticipated revenues between SEK 550-600 billion. This clarified ambition additional underlines that Volvo Cars seeks to develop when it comes to revenues and worth somewhat than on quantity alone, thereby focusing much more on worthwhile progress. 

Note to editors

  • Chief Executive, Jim Rowan, Chief Financial Officer, Johan Ekdahl, and Chief Commercial Officer and Deputy CEO, Björn Annwall, will host a livestream on Volvo Cars’ 2023 outcomes for media, buyers and analysts at 08:00 CET right now. The displays will probably be held in English and adopted by a Q&A session.

Link for livestream: https://live.volvocars.com

China-only hyperlink for livestream: https://live.volvocars.com.cn

It will probably be potential to ask questions throughout the Q&A session following the principle presentation. To take part, you’ll be able to both use the chat operate on-line to sort your query or you’ll be able to name in. To name in, members have to register through the hyperlink under and can then obtain the dial-in particulars and particular person PIN.

Link to register

Link to Geely press release

Link to Polestar press release

This disclosure accommodates info that Volvo Car AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The info was submitted for publication, via the company of the contact particular person, on 01-02-2024 07:00 CET.

 

VolvoCars

Volvo Cars Q3 results: momentum continues while performing and transforming

  • Q3 revenue was SEK 92 bn (SEK 79 bn in Q3 2022)

  • Q3 operating income (excluding JVs and associates) was SEK 6.1 bn (SEK 3.5 bn in Q3 2022)

  • Q3 operating income was SEK 4.5 bn (SEK 2.1 bn in Q3 2022)

  • Q3 EBIT margin (excluding JVs and associates) was 6.7 per cent (4.4 per cent in Q3 2022)

  • Q3 EBIT margin was 4.8 per cent (2.6 per cent in Q3 2022)

  • Q3 basic earnings per share was SEK 1.01 (SEK 0.11 in Q3 2022)

  • Q3 fully electric car sales share at 13 per cent (7 per cent in Q3 2022)

Volvo Cars today reports an almost 75 per cent increase in operating profits, excluding joint ventures and associates, to SEK 6.1 bn for the third quarter of 2023. The EBIT (operating) margin excluding joint ventures and associates came in at 6.7 per cent, compared with a margin of 4.4 per cent in the same period last year. The company saw strong sales and revenue growth during the quarter, which in combination with lower costs for raw materials and logistics resulted in a solid underlying operating profit.

“Our operating performance is gathering momentum, while we continue to make steady progress on our transformation objectives,” said Jim Rowan, President and Chief Executive of Volvo Cars. “As such, the quarter developed as we planned and communicated, putting us in a good position to close out the year with solid double-digit growth in retail volumes and a considerably higher share of fully electric cars for the full year. At the same time, uncertainties remain on the horizon, and we continue to be watchful.”

The full CEO report, with more detailed highlights of the quarter, is included in the interim report for the period and can be found here.

Retail sales continued to improve during the quarter, with solid double-digit growth in all three months and sales growth of 22 per cent for the period compared with the third quarter of 2022. That means Volvo Cars has now reported 13 consecutive months of retail sales growth, illustrating solid demand for its cars despite pricing pressures in many parts of the world.

The company’s pure electric sales share of 13 per cent for the quarter was almost double what it was in the same period in 2022, increasing by 111 per cent year on year. This underlines how Volvo Cars is well on its way to become one of the fastest transformers in the industry. The launch of the competitively priced, fully electric EX30 SUV will serve to strengthen its position and help the company in its ambition to become a fully electric car company by 2030.

Customer response to models such as the EX30 has been strong, and the small SUV generated higher than expected pre-orders. EX30 production started in the third quarter and the first cars are expected to be delivered during Q4, with production and deliveries ramping up in earnest in 2024.

When Volvo Cars revealed the EX30 in June, it indicated it was exploring additional manufacturing locations globally, and earlier today the company announced its plan to expand production of the EX30 and to also build it at the Ghent plant in Belgium from 2025. This decision reflects the strong demand for the EX30, supports Volvo Cars’ strategy of building where it sells, and boosts production capacity for the car in Europe as well as for global export.

Q3 operating and financial performance
The solid operational performance and good momentum was reflected in the company’s key operational indicators. Production volumes in the third quarter were up by 16 per cent versus the same period a year ago, as availability and visibility continued to improve in the supply chain.

Commercially, Volvo Cars’ order book remained stable and the company managed to maintain premium pricing. Its strong brand position, based on safety, quality and Scandinavian design, has proven to be a real asset in maintaining its premium pricing position. As a result, the company booked a revenue for the quarter of SEK 92 billion, up 16 per cent compared with the same period last year.

At the same time, the gross margin continued to improve and came in at 19.6 per cent, helped by improving margins on electric cars, which came in at 9 per cent and was significantly up compared with the last quarter. This underscores that lower lithium prices are starting to have an effect, as well as the company is realizing the effects of increased pricing on model-year 2024 fully electric cars – as indicated during the previous quarter. Once the EX30 starts to be shipped to customers, it will further boost Volvo Cars’ profitable growth in fully electric cars, which the company believes will position it well versus many of its competitors.

In addition to lower raw material prices, costs for freight and other logistics have also eased. Spot buy costs for key components such as semiconductors were also reduced, while Volvo Cars’ internal cost efficiency and optimization initiatives are starting to bear fruit.

With regards to its climate action plan, Volvo Cars continued to make progress in its efforts to reduce its CO2 footprint per car. During the first nine months of the year, overall CO2 emissions per car were 19 per cent lower compared with our 2018 benchmark, supporting our mid-decade ambition of a 40 per cent CO2 reduction per car.

Looking ahead
The performance for the third quarter puts Volvo Cars in a position to close out the year in line with earlier communications: solid double-digit growth in retail volumes for the full year and an increased share of fully electric cars versus 2022.

This positions the company well for a fast start in 2024, when it will bring three new fully electric models on the roads. Deliveries of the EX30 to customers are starting soon, and on 12 November it will reveal the Volvo EM90, the company’s first ever premium multi-purpose vehicle (MPV). That means that in less than six months, Volvo Cars will have unveiled two brand-new cars into two new segments, on top of the EX90 revealed late last year.

The company’s current trajectory shows that the building blocks for its transformation in recent years are starting to deliver at pace. Rather than simply delivering on its transformation passively, Volvo Cars chooses to actively engage with wider changes in the key technology shifts for the future and be one of the fastest industry transformers.

“We remain vigilant in light of the macroeconomic and geopolitical uncertainties and remain laser-focused on execution,” said Jim Rowan. “We will continue to emphasize cost-consciousness throughout our organization and constantly work to make our business more efficient and more sustainable.”

This disclosure contains information that Volvo Car AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 26-10-2023 07:00 CET.

VolvoCars

Volvo Cars Q2 results: full speed ahead in transformation with a solid business performance

  • Q2 revenue was SEK 102.2 bn (SEK 71.3 bn in Q2 2022)

  • Q2 EBIT (excluding JVs and associates) was SEK 6.4 bn (SEK 4.6 bn in Q2 2022)

  • Q2 EBIT was SEK 5.0 bn (SEK 10.8 bn in Q2 2022)

  • Q2 EBIT margin, excluding JVs and associates and without non-recurring items, was 7.2 per cent

  • Q2 EBIT margin (excluding JVs and associates) was 6.3 per cent (6.5 per cent in Q2 2022)

  • Q2 EBIT margin was 4.9 per cent (15.1 per cent in Q2 2022)

  • Q2 basic earnings per share was SEK 1.12 (SEK 3.00 in Q2 2022)

  • Q2 fully electric car sales share at 16 per cent (7 per cent in Q2 2022)

Volvo Cars today reports a 39 per cent increase in operating profits, excluding joint ventures and associates, to SEK 6.4 bn and a corresponding EBIT margin of 6.3 per cent for the second quarter of 2023. The result came despite a SEK 0.9 bn non-recurring item related to the redundancy programme announced in May, part of securing a more efficient and sustainable cost base for the future. Without this item, the underlying EBIT margin, excluding joint ventures and associates, was 7.2 per cent in the second quarter. This illustrates that the solid underlying performance momentum from the first three months of the year continued during this past quarter.

The company’s EBIT, including joint ventures and associates, reached SEK 5 bn, which was lower compared to the corresponding period last year. This is mainly because group EBIT for the second quarter of 2022 was positively influenced by the one-time, non-recurring accounting effects of Polestar’s listing on the Nasdaq stock exchange in New York. The interim report for the second quarter of 2023 can be found here.

“The second quarter of 2023 shows that the year is shaping up as planned,” said Jim Rowan, President and Chief Executive. “In these past three months we have continued to deliver on our ambitious transformation goals and made steady progress. At the same time, we also achieved a solid underlying business performance with increased sales and revenues. We are performing and transforming, while navigating the external challenges that have come our way.”

During the quarter, the company reported a continued strong sales performance in electric cars. Sales of fully electric Volvo car models increased by 178 per cent year-on-year during the quarter and accounted for 16 per cent of its total share. The company’s newly launched fully electric cars – the Volvo EX90 and EX30 SUV models – are not yet in production and have so far not contributed to the company’s 2023 performance. Once these new cars hit the roads, they will further boost fully electric car sales towards Volvo Cars’ ambitious goal to sell only fully electric cars by 2030.

While it delivered a higher percentage of fully electric cars during the quarter, the company’s margins on fully electric cars were impacted in this period because the lithium used in these cars was sourced when prices peaked during late 2022.

Additionally, as it introduced new model year 2024 fully electric cars with a considerably better range than existing models, Volvo Cars proactively shifted out the inventory of model year 2023 cars.

As the company enters the second half of 2023 this dynamic will change, since it will not only benefit from lower lithium prices, but also realise the effects of increased pricing on MY2024 fully electric cars. Therefore, margins on fully electric cars are expected to improve in the coming quarters.

Last month, Volvo Cars also revealed the fully electric EX30, its first ever small SUV. With this car, the company enters an important new segment and customer demographic, and one that it expects to grow rapidly in the coming years. The EX30 will also boost the company’s profitable growth in fully electric cars, with expected gross margins on the car in the range of 15 to 20 per cent. Both the EX30 and the larger EX90 are exciting steps into the future and clearly demonstrate Volvo Cars’ course going forward: premium electric cars, built on next-generation electric architectures with advanced battery and computing technology, as well as next-level passive and active safety features.

Volvo Cars continued its commercial transformation this past quarter. In June, it reached another key milestone when the United Kingdom became its first market to fully transform from a traditional wholesale business to a direct consumer model that is designed around flexibility for the customer. The knowledge it gains from the UK commercial transformation will be crucial as the company plans to make more markets fully direct in the coming years, together with its trusted retail partners. This will both improve the overall customer experience and make its commercial network more efficient, transparent and cost-effective.

In May, Volvo Cars also increased the focus on the global cost optimisation and resource efficiency initiative it launched late last year. This included a global redundancy programme including around 1,300 office-based positions in Sweden, as part of efforts to reduce costs and drive efficiencies across its global operations. The aim is to establish a more efficient and sustainable cost base for the future, by restructuring and changing ways of working in parts of the organisation, as well as focusing even more on securing the relevant skills it needs to be successful.

Q2 operating and financial performance

In terms of its operational performance during the second quarter, Volvo Cars recorded revenues of SEK 102.2 billion, an increase of 43 per cent versus the same period in 2022. It also saw a solid global sales increase of 25 per cent to 178,800 cars sold, a strong performance in electrified car sales, as well as continued premium pricing in many markets.

The sales performance was helped by improved production output in the company’s factories. During the second quarter, it produced 50 per cent more cars than in the same period last year. This is a validation of the steps the company introduced to make its supply chain more resilient, such as broadening its supplier base, improving performance and delivery from its suppliers, developing direct relationships with key semi-conductor companies and foundries, and creating more transparency in the overall value chain.

Second-quarter EBIT, excluding joint ventures and associates, was weighed down by a non-recurring item of about SEK 0.9 billion, but still came in at SEK 6.4 billion, an increase of 39 per cent year-on-year. This cost was related to the redundancy programme that was part of the enhanced cost-efficiency initiative announced in May.

Efforts to reduce the company’s CO2 footprint per car also continued to progress. During the second quarter of the year, overall CO2 emissions per car were 18.8 per cent lower compared with its 2018 benchmark, supporting its mid-decade ambition of a 40 per cent CO2 reduction per car.

Looking ahead to the rest of the year

2023 remains a crucial year in Volvo Cars’ transformation. With more new electric cars on the way and work ongoing on a new battery plant in Sweden and its planned new electric car factory in Slovakia, the company is putting in place important building blocks for its next growth phase.

It has opened a new Tech Hub in Krakow, Poland, which will complement existing ones in Stockholm and Lund in Sweden, and Bangalore in India. These Tech Hubs and its other R&D centres will help Volvo Cars deliver on its ambition to become a leader in future mobility, by creating a global powerhouse of next-generation technology. The company will also continue its commercial transformation towards more direct business and a constantly improving customer experience.

More broadly speaking, the company sees supply and demand continue to normalise in the wider market, which brings some additional pricing pressure as price levels have also started to normalise in several markets. Yet while rising interest rates in some of its largest markets put pressure on the consumer and the overall market, demand for Volvo cars continues to be healthy.

Assuming there are no further unexpected supply chain disruptions, Volvo Cars expects a solid double-digit growth in retail sales for the full year. It also expects the share of fully electric car sales to come in even higher than last year’s full-year share of 11 per cent.

“We’re staying the course and continue to make progress towards our ambition to be a leader in next-generation mobility,” said Jim Rowan. “The proof of a real transformation is in its execution and that is where our focus continues to be as we head into the second half of 2023.”

This disclosure contains information that Volvo Car AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014) and the Swedish Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person, on 20-07-2023 07:00 CET.