Volvo has to deliver some large quantity of trucks within the fourth quarter of this fiscal year. In Sweden alone, they have about 60,000 new trucks to deliver in Q4. And yet, the combo of complicated supply chains plus semiconductor shortages tend to constrict the number of new orders that the manufacturer could potentially be using in the backlog.
The 4th Quarter net sales are increasing to about 6% by Swedish krona or $10.9 billion, when compared to SEK 96.9 billion. Which can also easily translate to $10.3 billion only a little earlier just a year ago. When you adjust for currency movements and divesting UD trucks, this could have been sold to Isuzu for only $2 billion in April of 2021. In which the increase had been as close to 12%.
Volvo Is In An “Uh Oh” Situation.
Volvo AB CEO Martin Lundstedt has made it known in a shareholder letter that “Demand for trucks across key regions remains high and we are doing our utmost to produce as much as we can to reduce long delivery times to our customers. We have had extra costs to manage production due to supply chain disruptions as well as higher costs for material and freight.”
In which case, Freight deman has improved construction activity that has returned fleet utilization towards pre-COVID levels. This is seen by a high demand for Volvo service for new and used trucks. Lundstedt goes on to say that “The situation in the global supply chain for semiconductors and other components remains unstable, characterized by disruptions, unpredictability and lack of freight capacity. We will therefore continue to have disruptions and stoppages both in the production of trucks and in other parts of the Group.” Would you almost believe that this is happening to Volvo Trucks, no less?