Volvo car sales tumble amid ongoing chip shortages

Semiconductor drought 'affecting all plants and models' says automaker

Volvo is again blaming "chip shortages" after the company experienced a 22.1 percent drop in sales for cars in March compared to the previous year.

"Customer demand remains strong," insisted the company after reporting sales of 58,677 cars.

Although it described the drop as a "temporary deviation," Volvo said it expected production through the second quarter to be affected by supply constraints.

The Register asked the company if it could elaborate on the purpose of the component, and we were told by a representative: "The specific chip type covers a range of different electrical functions in the car (so not limited to one function), and is sourced from different locations and suppliers. The shortage is affecting all plants and car models."

Volvo had warned investors earlier this year that problems were coming, and so here we are. It is also not the only automobile manufacturer affected. Both Jaguar Land Rover and General Motors have issued warnings in recent months as supply shortages continued to hit production lines.

Relative newbie Tesla is also affected by the chip drought but boss Elon Mush said in February that it was becoming less impactful.

"We still expect to be part or primarily chip-limited this year and that chip limitation should alleviate next year," he told investors.

He said Tesla had re-engineered vehicles to mitigate the chip shortage including rewriting code, tweaking chips designs and pulling back on the amount of chips needed per car.

"It's hard to predict 2022 because we still have lingering supply chain issues, globally. But I think at least the chip side of things appears to look like it will alleviate end of this year or 2023. I mean, there are a crazy number of chip fabs being built, which is great," Musk said.

Chip shortages have hit car makers particularly hard because they operate, or at least did, inflexible supply chains and were unable to quickly recover production after cancelling component orders when the pandemic hit in early 2020.

As for Volvo, fully electric cars made up 9 percent of total sales in March (while its Recharge models accounted for 35.5 percent).

Europe experienced the sharpest fall – down by 30.4 percent in March. Sales in China were down by 22.6 percent compared to the same period last year. The US market fared a bit better, only registering a 5 percent drop compared to the same month last year.

The figures confirm the fears of analysts – for some car makers, things are looking grim. "The supply chain constraints, including the ongoing impacts from COVID, are expected to remain a problem for the industry throughout 2022," said Volvo.

Perhaps it is time to dispense with all that electro-gadgetry and restart production of the one, true Volvo. The 140, of course. ®