Sweden’s Volvo Group orders and deliveries for heavy-duty trucks in North America rose in Q3, but shortages of microchips and other components caused about two weeks of downtime and will continue to hold down and likely interrupt production for the near future.
“We have been restrictive with our order slotting due to our already large order books and long delivery times,” Volvo AB President and CEO Martin Lundstedt said. Backlogs of unbuilt equipment reach into the second half of 2022 for trucks and some other segments.
Finishing incomplete vehicles as microchips and other missing components become available is part of running the business now, Volvo Group Chief Financial Officer Jan Ytterberg said.
Global shortage of semiconductors used throughout trucks and other equipment and shortages of numerous components bogged down in the supply chain caused slowdowns and halts to production during the quarter.
“We are fully focused on producing and delivering trucks to meet customer demand, but the persistent problems in the supply chain have meant that we from time to time have been forced to slow down or stop production,” Lundstedt said.
UAW strikes impact US market share
Still, Volvo (OTC: VLVLY) reported North American orders rose 75% over the year-ago quarter to 21,750 versus 12,433. North American deliveries improved 67% to 10,222 versus 6,103 a year ago. Volvo Truck North America market share dropped to 8.5% from 9.5% a year earlier, impacted by seven weeks of United Auto Workers’ strikes at Volvo’s New River Valley assembly operations in Dublin, Virginia.
Mack Trucks saw its share rise four-tenths of a percentage point to 7.4% from 7.0%.
“There is clearly room for improvements here given these interruptions and focus now is to continue to deliver on the strong order book here,” Lundstedt said on a conference call with analysts.
Volvo has cut 20,000 units of U.S. truck production from its estimate for the year because of supply chain issues.
“Suppliers still will be the deciding factor of the total market for the coming quarters at least, and then we will see when it will shift into a more demand-driven total market.”
Globally, Volvo Trucks reported a 26% net sales increase to 53.4 million Swedish krona ($6.2 billion). Overall orders were down 4% while deliveries increased 30%. Adjusted operating income increased to 5,814 million SEK ($675.7 million) from a negative 4,522 million SEK (minus $525.5 million) a year ago. The Q3 truck margin was 10.9% compared to a negative 9.5%.
Lundstedt described the supply chain, especially for semiconductors, as unstable.
“We will therefore continue to have disruptions and stoppages in the production of trucks and in other parts of the group,” he said.
Volvo delivered 103 battery-electric trucks globally and took orders for 214 during the quarter.