Lower Truck Sales, Higher Costs Hurt Volvo Q4 Profits, Margins

Volvo's order intake in the fourth quarter was due partly to the ramp-up of the VNL. (Volvo Trucks)

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A decrease in truck sales in North America and Europe plus increased production costs in the U.S. dragged on Volvo Group AB profits in the fourth quarter of 2024, the company said Jan. 29.

The Swedish truck, construction equipment and engine manufacturer posted a profit of $983 million in the most recent quarter, down 10.5% compared with $1.1 billion a year earlier. All Volvo financial data are reported in Swedish kronor, and dollar conversions are correct as of Jan. 29.

Volvo’s Q4 sales revenue decreased 6% year over year to $12.57 billion from $13.44 billion, with revenue from truck sales down 4% to $8.67 billion from $8.98 billion in the final three months of 2023.

The company sold 58,706 trucks worldwide in Q4, down 11% compared with 65,625 a year earlier. Sales of heavy-duty trucks decreased 6%, medium-duty truck sales fell 17%, and light-duty truck sales, particularly in Europe at the company’s Renault unit, slumped 38%.

Volvo Group Q4 2024 Quarterly Report

The Gothenburg, Sweden-based parent company of Volvo Trucks North America and Mack Trucks won orders for 61,200 trucks in Q4, up 24% from 49,347 vehicles in the year-ago period.

VTNA sold 6,448 trucks in Q4, down 19% compared with 7,964 trucks in the year-ago period, but Mack Trucks sold 7,104 trucks in the three months ending Dec. 31, up 23% from 5,774 trucks a year earlier.

Part of that decline at VTNA was the result of slower-than-expected production. The cost of manufacturing also rose for the same underlying reason, hurting the parent company’s bottom line.

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Lundstedt 

Costs were higher than expected because of Hurricane Helene’s impact on supply chains in western North Carolina, the continued ramp-up of the flagship Volvo VNL tractor and reintegration of Mack Trucks’ cab assembly operations, CEO Martin Lundstedt said during an analyst conference call.

The impact of Helene was most prominent at the beginning of the fourth quarter, the company’s top executive noted, but production rose as the quarter progressed.

“Those volumes have been gradually recovered during the quarter with a fantastic effort, I have to say, by the complete supply chain, both internally and externally, but of course, it comes with extra costs,” he said.

Volvo did not break out Helene’s impact on North American costs or operating margin, although it said the company’s overall operating margin on the trucks sold in Q4 fell to 10.6% from 13.7% a year earlier.

Lundstedt said the additional costs were not unexpected with the VNL, which launched in January. The order book for the tractor opened in Q4.

“When you are doing these big launches, of course, you need to plan for double production and also resilience in the system,” he said. “We are expecting that to fade out.”

Meantime, North American demand for vocational trucks remained strong, with long lead times because of capacity constraints at body builders, Volvo said.

Order intake in North America increased 26% to 16,944 trucks in Q4 from 13,492 on the back of appetite for Mack Trucks’ vocational models and the ramp-up of the VNL. Mack Trucks orders in North America Q4 soared 62% to 7,969 from 4,931 a year earlier. Orders for VTNA trucks in the most recent quarter totaled 8,960, up 5% year on year from 8,548.

Across the Atlantic, European orders increased 37% to 29,207 units, with orders for heavy- and medium-duty trucks increasing 68%, largely as a result of replacement demand from Eastern European fleets, the company said.

In Q4, the European truck market continued to decline compared with 2023, with freight volumes and rates both lower. Sales in Europe decreased 19% year over year in Q4 to 29,344 trucks, and light-duty truck sales fell by twice that rate.

Volvo expects a much better 2025 in Europe and North America, with prognostications for the latter powered by a rebound in the on-the-road market and new flagship tractors from VTNA and Mack Trucks.

In November, executives said Volvo Trucks was targeting a 25% North American heavy-duty truck market share by 2030.

VTNA won a 10.2% share of U.S. Class 8 retail sales in 2024, while Mack Trucks captured a 6.9% share, according to Wards Intelligence data. In 2023, VTNA had a 10% slice of the pie and Mack Trucks 6.8%.

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Alm 

“Our ambition is for Volvo Trucks to have a 15% market share in North America. And it will happen,” company President Roger Alm said Nov. 14, while Mack is targeting 10%.

Lundstedt, however, does not want those ambitions to be overreliant on purchases of trucks to preempt the currently scheduled introduction of new U.S. emission regulations in 2027 — known colloquially as the pre-buy.

“In a dream scenario, I think it is much better if we don’t see too much pre-buy, and getting more to a market that is following the economic activity and general activity,” Lundstedt said. “And there, we feel, still positive about what is about to come.

“We are starting to see freight [rates] and activity levels coming back in the on-road segment; and vocational is strong. What we have guided for related to the tailwind, we still think will be something, if it will not be overpronounced, I think it will be good for the industry and Volvo.”