Volvo Cars published unsatisfactory financial results for the first quarter – revenue fell by 11.7% compared to last year, reaching 82.9 billion Swedish kronor. The company’s operating profit also sharply decreased from 4.7 billion to 1.9 billion kronor.
The automaker linked these negative indicators to “contemporary global shocks and complex external conditions for the automotive industry.” Among other reasons are increased pricing pressure, which led to a rise in discounts.
To rectify the situation, Volvo launched an “accelerated action plan for cost and cash flow optimization” worth 18 billion kronor. The details of the program are not disclosed, but it involves reducing investments and cutting costs, particularly on the development of new models jointly with Geely.
Besides savings, the company plans to regionalize its approach to better meet the needs of different markets. The main focus is on China and the USA – key regions for the brand.
In China, the first model with an extended range will be presented this year. This project demonstrates Volvo’s ability to adapt its products to the specific requirements of individual markets.
To strengthen its position in the USA, a new regional structure is being created – the “America” group, which will also cover Canada and Latin America. This reorganization will simplify global operations by dividing them into three zones: America, Greater China, and Europe with other countries.
Due to its dependence on the Chinese market, Volvo faces problems because of Trump’s tariffs. To avoid them, the company plans to more actively use its production facilities in the USA, increasing local production.
The brand also promises to update its model lineup for the American market. Details have not been disclosed yet, but plans for the launch of a new electric model by 2026 are already known.
Regarding production, the output of a new crossover has recently begun at the plant in Ghent (Belgium), which solved the problem of dependence on Chinese production capacities. Mass production is set to ramp up in the second half of this year.
The share of electric vehicles in Volvo’s total sales for the first quarter was almost 20%, and if hybrids are included – 43%.
Despite some positive developments, the company warned that 2025 will be a difficult year due to economic instability, geopolitical risks, and market turbulence. A further decline in sales volumes, intensified price competition, and the negative impact of customs restrictions are expected.
Because of these factors, Volvo has suspended its financial forecasts for 2025-2026.