FRANKFURT, Sept 10 Swedish carmaker Volvo
expects its profit margins to reach levels on par with
those of premium-segment rivals once a 2020 goal of doubling
global annual vehicle sales is attained, Chief Executive Hakan
"When we have reached 800,000 we should of course be solidly
profitable," Samuelsson told Reuters on Tuesday.
Volvo expects higher volumes and margins to help it break
even this year on a forecast volume of 425,000 in sales after it
made an operating loss of 577 million Swedish crowns ($87.20
million) in the first half.
Wholly owned by China's Zhejiang Geely Holding Group
Co., Volvo is seeking to take on larger global luxury
brands such as BMW, Daimler's Mercedes-Benz
and Volkswagen's Audi to win market share big enough
to foot the bill for the vast investments needed to develop new
BMW and Mercedes-Benz target sustainable operating margins
anywhere between 8-10 percent at their automotive business.
Samuelsson declined to name a specific margin target,
however: "I want to have a more stable basis cost-wise before we
start communicating that."
The Gothenburg, Sweden-based company aims to eke out cost
savings by sharing more parts between different cars in its
range, and by deepening its base of suppliers in China.
"We have to be leaner in our own administration. We have a
programme now running reducing about 100 white collar jobs,"
Once these three strategic pillars are completed and the
company attains its 800,000 vehicle sales goal by the end of the
decade, then margins should be comparable to its peers.
"Then we should reach profitability levels that you could
expect for a premium manufacturer in this size," the Volvo Cars
Daimler Chief Executive Dieter Zetsche told Reuters he
expects profit margins at the Mercedes-Benz luxury car business
to improve further next year thanks to a rejuvenated model
(Reporting by Christiaan Hetzner and Irene Preisinger; writing
by Edward Taylor; editing by David Evans)