Volvo Cars said the worst of the chip crisis that has hampered the industry’s post-pandemic recovery may be over, although it warned of rising prices as raw material costs bite .
The Swedish manufacturer expects the shortage of semiconductors to continue in the first half, but thinks the impact on production is fading. The Gothenburg-based group on Friday posted record full-year profits of 14.2 billion Swedish crowns (£1.1 billion) on sales of 699 billion Swedish crowns.
“I don’t think we’ll see a worsening trend,” chief executive Hakan Samuelsson told the Financial Times.
“The supply chain was a problem in the fourth quarter, but on the production side it was worse in the third quarter,” he added. “We are on the right path to improve,” he added, but refrained from predicting that the problem will be fully resolved in the second half.
Shares of Volvo Cars fell more than 4% at the start of Stockholm trading on Friday.
Fourth-quarter profit fell 60% to 2.3 billion Swedish kronor from the same period a year earlier as chip shortages dampened production and Volvo’s Polestar business incurred costs accountants.
Even after chip shortages improve, the company will face higher raw material costs, leading to price hikes.
“We are raising prices more than we normally would,” said chief financial officer Björn Annwall.
The company, which went public last year, said Samuelsson would retire next month. Former Dyson CEO Jim Rowan is expected to replace him.
The share of all-electric cars rose to 6% in the fourth quarter, with production expected to average around 10% in the coming year. The company has pledged to sell only electric models by 2030.