It has been reported today that the car manufacturer Volvo has seen a 6.1% drop in car sales during 2012, and is claiming that 2013 will also be a difficult year for the company due to the bad economy and price wars with other companies. Chinese manufacturer Zhejiang Geely Holding Group Co. bought Volvo from Ford Motor Co. in 2010, yet has failed to see the amount of profits they were hoping for, especially from the Chinese market.
In 2011 Volvo sold 449,255 vehicles, whilst last year they only sold 421,951, which they blame on the weaker consumer demand and the phase out of old models. Volvo Cars said in a statement today
“Competition in the car industry will most likely continue to be as fierce as in 2012 as manufacturers will seek to capture volumes and market shares in a market where the economic situation will remain unstable. 2013 is therefore expected to be a challenging year in terms of margins and growth.”
To make matters worse, auto markets around the world have been improving, such as in the United States where sales of cars and light trucks rose 13.4% in 2012. Volvo has reportedly been struggling to gain momentum for a revamp plan which will help them keep up with their rivals, especially in the Chinese market which Volvo has identified as their key growth area. Martin Skold, a researcher focusing on the auto industry at the Stockholm School of Economics has said that “Volvo has had an in-between year – old models have been phased out while new models have yet to enter the market. Volvo also hasn’t been able to position itself on the Chinese market in the same way as for example the German auto manufacturers, which have been there longer and have better brand recognition.”
For motor traders this news will definitely have an effect on their decision to sell Volvo vehicles, especially as it seems they are unlikely to gain popularity during 2013. For those that have Volvo vehicles on their lots, it is still important to have them covered by motor traders insurance so that they can be kept maintained even during times where they may be more difficult to sell.