Geely-owned carmaker Volvo Car Group has kept its full-year sales target despite a slowdown in China. As Hayley Platt reports strong European demand helped power a 71 percent jump in first-half profit.
Strong demand in Europe helped Volvo steer its way to a 71 percent rise in half year operating profits. The Swedish based company, bought by China's Geely in 2010, reported earnings just shy of $195,000. That's almost double what they were a year earlier. But there are bumps ahead. The group has been investing heavily in new factories in China. And has been banking on strong growth there to pay for it. The recent China slowdown has raised questions about whether that was a smart move. But Rabobank's Jane Foley thinks demand will still pick up. SOUNDBITE: Jane Foley, Senior FX Strategist, Rabobank, saying (English): "We have seen in recent decades a significant increase in the middle classes in China and that suggests that there should be relatively solid demand for luxury goods such as cars for Volvo etc." Currencies could also provide Volvo with a boost, particularly from a relatively soft Swedish Krona. SOUNDBITE: Jane Foley, Senior FX Strategist, Rabobank, saying (English): "If we look at some of the US auto producers they've been complaining recently about the impact of the strong dollar so if you like the currency market right now, is that the US producers are a little bit more disadvantaged and the likes of Volvo should perhaps seen as a little bit of a brighter outlook relative to their competitors in the US." Volvo aims to almost double its sales in 2020 to 800,000. And says its on track to sell around 500,000 this year. But much of its growth is still expected to come from Europe and the U.S. making up for the tougher conditions in China where its flagship XC90 goes on sale later this year.