One of Europe's top car brands, Volvo, has said that the global chip supply is not as bad as it used to be. The car company's semiconductor inventory is now "back at fully supply," according to CEO Jim Rowan.
Chip Supply Has Eased Up
In an interview with CNBC on Wednesday, July 20, Rowan said that in the first three months of 2022, Volvo was affected by one specific semiconductor, which hampered production across most of their range.
Rowan added that the company had forecasted that they would be through the shortage by the end of the second quarter, and that is what they have seen. He confirmed that they no longer have any semiconductor issues.
Semiconductors have been in short supply around the world in the past two years because of a litany of issues with global supply chains caused by the COVID-19 pandemic, according to Reuters.
The shortage took a toll on the auto industry, which has increasingly relied on semiconductors to control everything from the braking system to more high-technology features such as interactive displays.
Volvo's Second Quarter Results
Volvo plays in the more luxury end of the auto sector, and the company posted a set of second-quarter results on Wednesday, July 20.
The auto company saw a 27% decrease in retail sales, with 143,006 units sold in the three months through to June, and a 2% decrease in revenues to $7 billion, according to The Register.
Operating earnings before interest and taxes, or EBIT, revenues came in at $10 billion, which is more than double the $4 billion it reported in the second quarter of 2021.
The profits were boosted by a spinoff of Volvo's electric car-focused subsidiary Polestar on the Nasdaq.
Volvo said that its results were hampered by inflation in raw material prices and supply chain restraints resulting from COVID-19 lockdowns in Beijing. The company is majority-owned by Chinese auto firm Geely and has much of its production based in the country.
On Wednesday, July 20, the company's shares were down 5%. Nevertheless, the company struck a bright tone overall, characterizing the results as steady despite the intense market turbulence.
Volvo saw a great improvement in stabilizing its global supply chain, with production making a strong comeback in June. In the second quarter, the company was hampered by the lockdowns in China.
But now that the China lockdown is over, they are back with semiconductors back in full supply, for at least Volvo.
Consumer Demand Increased
Rowan added that consumer demand has also improved despite inflation and fears of a recession. The company had also managed to increase its products' prices to offset the prices of raw materials.
Even after the price increase, the automaker did not see any decrease in demand globally.
Volvo saw better demand for its Recharge line of plug-in hybrids and electric vehicles as the company is pushing to go full-electric by the end of the decade.
Still, the car company said in its earning statement that it expects retail sales to be flat or lower in 2022 compared to 2021 because of the time lag between production and retail deliveries.
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Written by Sophie Webster
