Volvo, given up as beyond salvage by former owner Ford, was sold off to China’s Geely in the automotive equivalent of a yardsale at $1.8 billion. Saying no is always easier than saying yes (well, there are certain exceptions), so most augurs said: “This won’t work.” Asked why, they answered: “It was tried it before, and it failed.”
Wonders of wonders, it appears to be working: Volvo Cars reported an EBIT of 600 million kronor (about 93 million U.S. dollars) in the second quarter, 40 percent more than in the same period of the previous year, a statement from Volvo Cars says.
In the first six months of 2011, Volvo Car Corporation has delivered an operating profit of 1.2 billion kronor ($188 million). Not bad for Sweden’s biggest little car company.
“We are gradually returning to sustainable profitability although we have more work to do before we reach our objectives. A good sales increase is evident in many markets as we are working to revitalize the Volvo brand to attract more customers,” said Volvo CEO Stefan Jacoby.
Being owned by a Chinese company did not hurt Volvo at all. Globally, Volvo sold 230,746 vehicles in the first six months, an increase of 20.3 percent compared to 2010. In the EU, Volvo sold a respectable 127,862 units in the first 6 months. I don’t have Volvo U.S. sales for June, but in July they were reported as 41,898 for the first seven months.
Turning a profit on some 400,000 units annually is a chore. If they can get the volume up to say a million (doable with Chinese production), that quirky Swedish company could turn into a nice little business.