Volvo Cars shares plunge on earnings fall, withdrawn guidance and major cost-cutting drive

Volvo Cars, a Sweden-based automaker owned by China’s Geely Holding, has announced plans to cut costs by 18 billion Swedish kronor ($1.87 billion) due to a sharp decline in operating profit in the first quarter. The company reported an operating profit of 1.9 billion kronor, down from 4.7 billion kronor in the same period last year, with a margin on earnings before interest and taxes (EBIT) decreasing to 2.3% from 5% a year earlier. Revenue also dropped to 82.9 billion kronor in the first quarter, compared to 93.9 billion kronor in the same period in 2024.

Volvo Cars attributed the poor results to reduced wholesales, currency effects, and industry challenges. To address this, the company announced a “cost and cash action plan” that includes investment cuts and job redundancies worldwide. Financial guidance for 2025 and 2026 has been withdrawn due to uncertainties in the automotive sector.

CEO Håkan Samuelsson highlighted the market challenges, including volume drops, price competition, and tariff pressures. He emphasized the company’s focus on controlling costs amid the turbulent market environment. Volvo Cars is also looking to enhance its U.S. product lineup and optimize its South Carolina factory to mitigate the impact of tariffs imposed by the U.S. government.

Volvo Cars aims to increase the share of “electrified cars” in its global sales volume to 90-100% by 2030, with 43% already achieved in the first quarter. The company’s stock fell by as much as 10% on Tuesday, reflecting the challenging conditions in the automotive industry.