Volvo North American orders drop amid inventory management

Swedish equipment manufacturer Volvo Group’s construction equipment and truck orders decreased in the first quarter as the manufacturer navigated supply issues, dealer inventory management, manufacturer book management and a slight utilization decline. 

Construction equipment deliveries down 25% YoY 

Volvo Construction Equipment (Volvo CE)’s North American orders, deliveries and sales dropped year over year in Q1, Volvo Group Chief Executive Martin Lundstedt said during the company’s earnings call today. He attributed the decline to excess deliveries in Q4 and lower machine utilization by construction companies.  

In Q1, the construction equipment subsidiary reported: 

• Orders were placed for 1,446 units, down 44.3% YoY; 
• Deliveries dipped 25.2% YoY to 1,746 units; and  
• Net sales declined 1.7% YoY 6.4 billion krona ($586.9 million). 

North American truck orders down 37% YoY 

Meanwhile, Volvo Trucks’ North American truck orders, deliveries and sales slipped YoY, as the manufacturer continued to manage book-to-bill ratio ahead of demand normalization following the pandemic, Lundstedt said. 

In Q1, the truck subsidiary reported: 

• Orders totaled 9,620 units, down 36.5% YoY; 
• Deliveries decreased 6% YoY to 15,056 units; and, 
• Net sales were $2.5 billion, down 1.3% YoY.

  

STATE OF PLAY:  

Volvo CE’s decline was due, in part, to more deliveries than sales in a strong Q4, although the impact should not be significant moving forward, Lundstedt said. 

“North American actual dealers were catching up when it comes to their deliveries or taking deliveries of parts in Quarter 4, and it became a little bit of an overhang that made Quarter 1 lower,” he said. “I don’t think we should see it as a dramatic change.” 

NOTEWORTHY:  To further the company’s North American expansion, Lundstedt announced that a Volvo and Mack manufacturing hub will open in Mexico in 2026. 

Existing hubs are in Pennsylvania and Virginia, Lundstedt said. 

MARKET REACTION: Shares of Volvo [OTC: VLVLY] were trading at $26.23 as of market close today, down 1.59% from market open. Volvo has a market capitalization of $52.77 billion.  

THE BOTTOM LINE:  

As global markets continue to normalize following unsteadiness during the pandemic, Volvo believes it will return to a balanced global book next quarter, Lundstedt said. 

Editor’s note: All amounts have been converted to U.S. dollars. 

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