Earnings
Volvo Cars swings to a SEK 3.7 billion underlying loss as China revenue nearly halves, and will cut 2,500 more jobs
The Swedish carmaker's revenue fell 23% in the third quarter, US tariffs and a CAFE credit write-down added to the damage, and it is adding SEK 5 billion of cost cuts.
HedgeWeekly News Desk ·
Volvo Cars posted an operating loss of SEK 3.7 billion for the third quarter, excluding joint ventures, associates and one-off items, against a SEK 5.8 billion profit a year earlier, the Gothenburg-based company said on Friday. Revenue dropped to SEK 66.9 billion from SEK 86.4 billion, and the reported operating loss reached SEK 5.6 billion, a margin of minus 8.4%.
China did the most damage: revenue there fell by almost half as new local brands and steep price cuts squeezed the company. In the US, tariffs and the end of consumer incentives for electrified cars hit margins, and Volvo Cars took a SEK 1.1 billion charge to revalue CAFE emission credits after legislative changes. It also booked a SEK 0.9 billion share of Polestar's losses. Gross margin narrowed to 14.7% from 20.4%, according to Reuters, and free cash flow was negative SEK 8.9 billion.
The carmaker will remove a further SEK 5 billion of indirect and variable costs and cut about 2,500 roles, roughly 2,000 of them in Sweden, through ending consultant contracts, attrition and exit packages, with the full effect due by the end of 2027. That follows 3,000 job cuts and an 18 billion crown savings plan launched after Håkan Samuelsson returned as chief executive in 2025. The company gave no numerical outlook and said the next two years in China would stay tough; it had already withdrawn its full-year volume and cash-flow guidance earlier this month.
Why it matters: the shares hit a record low this week and were down 54% this year before the report, per Reuters, so investors will judge the plan on cash burn and on whether the EX60, which has more than 50,000 European orders but a slower-than-planned ramp-up, can lift volumes. The contrast with Sweden's other Volvo is stark: truck maker Volvo Group, a separate company, reported on the same morning that net sales rose 8% to SEK 119.5 billion and its adjusted operating margin widened to 12.3% from 10.6%. For holders of European autos, Volvo Cars' result is another sign that China competition and US trade policy are hitting carmakers far harder than commercial vehicle makers.