Volvo warns instability could hit demand

Volvo Car Corp, the Swedish automaker owned by Zhejiang Geely Holding Group Co, warned that economic instability could hit auto demand in the second half. The recent developments in the global economy makes it difficult for us to predict the car market," Volvo Cars' Chief Executive Officer Stefan Jacoby said. "We need to be prepared for changes in consumer demand." European economic growth slowed more than economists forecast in the second quarter as Germany's recovery almost ground to a halt amid the worsening sovereign-debt crisis. Economic uncertainty is "particularly high," European Central Bank President Jean-Claude Trichet said. China growth Article continues below Volvo's cautionary tone comes after the carmaker posted a 40 per cent jump in second-quarter profit. Earnings before interest and taxes rose to 600 million crowns (Dh346 million)) from 430 million crowns a year earlier, Gothenburg-based Volvo said on the company's website. Deliveries rose 27 per cent to 123,919 cars with China showing the biggest growth increase with 62 per cent, it said. "We are gradually returning to sustainable profitability, although we have more work to do," Jacoby said. Volvo, which built a reputation around safety and reliability, aims to more than double sales to 800,000 vehicles and challenge luxury-car leader Bayerische Motoren Werke AG. The current "unstable economic climate" will likely result in consumer confidence, exchange rate and raw material price volatility that may in turn impact profits, Volvo said.