Volvo Cars has reported a sharp drop in earnings for the first quarter of 2025, citing global market turbulence, currency headwinds, and a planned reduction in wholesale volumes stemming from Q4 inventory trimming.
The company posted a Q1 revenue of SEK 82.9 billion, down 12% from SEK 93.9 billion in Q1 2024. Operating income excluding joint ventures and associates also took a hit, falling to SEK 1.9 billion from SEK 6.8 billion a year ago. Group EBIT mirrored this decline, dropping to SEK 1.9 billion from SEK 4.7 billion, leading to a narrowed EBIT margin of 2.3% compared to 5.0% in Q1 2024.
Basic earnings per share fell to SEK 0.40, significantly lower than the SEK 1.12 reported in the same quarter last year.
In response to these challenges, Volvo Cars has launched an aggressive SEK 18 billion cost and cash optimization plan aimed at bolstering profitability and structural efficiency. The initiative includes SEK 3 billion in variable cost reductions, SEK 5 billion in indirect spending efficiencies, and SEK 10 billion in cash actions to streamline working capital and capex during 2025–2026. Half of the EBIT impact from this plan is expected to materialize by 2026.
CEO Håkan Samuelsson acknowledged the tough climate facing the global automotive industry, stating, “Over the last few weeks, I have worked with the management team and other colleagues on a plan to make the company stronger and more resilient. While our strategy is clear, we must get better at delivering results.”
Volvo Cars sold 172,219 vehicles in Q1 2025, a 6% decline from the prior year. However, electrified vehicles (EVs and plug-in hybrids) accounted for 43% of total sales, with fully electric vehicles comprising 19%—the highest share among legacy premium carmakers.
Continuing its EV momentum, the company launched its latest software-defined fully electric vehicle, the ES90, in Q1. It also reaffirmed its commitment to becoming a fully electric carmaker, despite the current headwinds.
To adapt to regional market shifts, Volvo Cars announced the restructuring of its global operations into three strategic regions: Americas, Greater China, and Europe & Rest of the World. The new Americas region, encompassing the U.S., Canada, and Latin America, will be led by Luis Rezende following the departure of Mike Cottone after nearly 20 years with the company.
In China, Volvo plans to increase regional autonomy and will soon unveil its first extended-range plug-in hybrid tailored to local preferences.
Despite operational setbacks, Volvo Cars improved its free cash flow through better working capital management and by divesting its stake in Lynk & Co. Production of the EX30 began in April at its Ghent facility in Belgium, a key move in its “produce where we sell” strategy.
