Swedish equipment manufacturer Volvo Group’s North American truck and construction equipment orders declined in the second quarter as the company worked to reduce backlogs and manage inflation.
Volvo Truck’s North American truck orders totaled 8,708 for Q2, down 10.5% year over year, while the company’s global new truck orders landed at 48,308 in Q2, down 9.5% YoY, according to the company’s earnings release.
Volvo Construction Equipment (Volvo CE) received 1,064 construction equipment orders in North America, down 48% YoY, while the company’s worldwide equipment orders fell 41.1% YoY to 12,421.
Despite the Q2 decline in North American orders, orders for the first six months of 2023 increased compared with 2022 due to record order intake in Q1. North American truck orders for the first six months were 23,867, up 51.6% YoY, while construction orders tallied 3,660, up 10.9% YoY, according to the company’s earnings report.
“North America had restrictive order slotting due to long lead times,” Chief Executive Martin Lundstedt said during Volvo Group’s earnings call Wednesday. “We will continue to make sure that we have the right balance between order intake, production and deliveries, so we have an order book with the right quality to manage delivery reliability, while at the same time managing inflation and other uncertainties.”
North American deliveries remain strong
While backlog management and inflation drove orders down in Q2, deliveries for trucks and construction equipment increased during the quarter.
Volvo delivered 15,960 trucks to North America, up 5.9% YoY, while Volvo CE’s North American equipment deliveries totaled 2,650 units, up 34.7% YoY, according to the earnings report. Meanwhile, worldwide truck deliveries ticked up 5% YoY to 63,842, and global construction equipment deliveries went down 24.4% YoY to 16,940 units, primarily due to lower demand in South America and Asia.
“The quarter is a quarter with strong record earnings when deliveries were high in most of our major markets,” Jan Ytterberg, chief financial officer for Volvo, said during the earnings call. “We also see continued cost pressure coming from both inflation and [Volvo Group’s] transformation.”
North American truck deliveries for the first six months were 31,971, up 10.3% YoY, according to the company’s earnings presentation. Construction deliveries for the first six months were 4,984, up 34.6% YoY, according to the earnings report.
Electric equipment deliveries up
Deliveries for electric Volvo equipment increased in Q2, one year after the company opened its book for electric trucks and ahead of the breakout of the company’s compact electric equipment business unit.
Deliveries for electric Volvo, Renault Trucks and Mack units increased 251.4% YoY to 759 trucks in Q2, according to the earnings release. Volvo’s deliveries of fully electric compact equipment increased 34.9% YoY to 228 units.
While deliveries for Volvo electric trucks increased, orders for the trucks landed at 677 units, down 38.3% YoY. Orders for Volvo’s fully electric compact equipment stood at 205 units in Q2, down 19.9% YoY.
“When it comes to electrification, demand for electric vehicles and machines were increasing and we continue to expand our electric product ranges and manufacturing capabilities,” Lundstedt said. “When it comes to trucks in particular, we did see orders decline between Q2 last year and Q2 this year, and that was related to last year’s opening of the order book for the heavy-duty electric range for Volvo that created a spike that quarter.”
Shares of Volvo [OTC: VLVLY] were trading at $21.83 as of market close today, up 0.55% or $0.12 from market open. Volvo has a market capitalization of $44.8 billion.