Volvo Group reported third-quarter earnings and sales fell amid excessive Class 8 inventory in North America as orders and sales both dropped by more than 30%, compared with a very strong market in 2015.
The company said it would cut production further, but did not provide a timetable.
Volvo’s North American heavy-duty truck brands include Volvo Trucks and Mack Trucks, both based in Greensboro, North Carolina.
Quarterly income for the period ended September 30 fell to $293 million, or 14 cents per diluted share, compared with $344 million, or 17 cents, in the year-earlier period.
Revenue in the quarter slid to $7.7 billion from $8.2 billion, year-over-year.
“Volumes in our truck business were down in all markets except Europe, where activity remained high. Total deliveries of trucks decreased by 13%. The downward correction in the North American market continued and there is still a need to take down dealer inventories,” Volvo Group CEO Martin Lundstedt said in a statement.
Global truck orders dropped to 45,757, compared with 50,182 year-over-year.
North American orders dropped 37% in the quarter to 6,764, compared with 10,745 in the 2015 period, it said.
North American retail sales fell 35% to 11,556, compared with 17,720 year-over-year, it said.
During 2016, production volumes have been cut gradually, Lundstedt said, “and further steps will be taken.”
With growth unlikely this year or next, Volvo will focus on the “service business and continuous improvements,” he said.
Nonetheless, its truck business continued to improve its profitability and the adjusted operating margin increased to 8.2% despite 13% lower volumes, Gothenburg, Sweden-based Volvo Group said.