Volvo Cars reported a mixed financial performance for the fourth quarter of 2025, reflecting a challenging global automotive environment while maintaining progress in its electrification strategy and turnaround plan.
For Q4 2025, Volvo Cars recorded revenue of SEK 94.4 billion, down from SEK 112.1 billion in the same period last year. The company posted an operating income (EBIT) of SEK 1.9 billion with an EBIT margin of 2.0 per cent, compared to SEK 3.9 billion and a 3.4 per cent margin in Q4 2024. Adjusted operating income stood at SEK 1.8 billion, highlighting continued pressure on profitability.
Despite the decline in earnings, the company generated a positive free cash flow of SEK 8.8 billion in the quarter, supported by its SEK 18 billion cost and cash action plan. For the full year 2025, Volvo Cars reported an adjusted operating income of SEK 12.5 billion and an adjusted EBIT margin of 3.5 per cent, with free cash flow totaling SEK 2.4 billion.
Electrified vehicles continued to gain traction, with fully electric cars accounting for 24 per cent of Q4 sales, up from 21 per cent a year earlier. Electrified vehicles, including plug-in hybrids, represented 49 per cent of total sales, underscoring Volvo’s accelerating transition toward electric mobility.
The quarter was impacted by multiple external headwinds, including EU-US import tariffs, adverse currency effects from a stronger Swedish krona, weak consumer demand, and the removal of EV incentives in the United States. Pricing pressures and softer demand affected overall revenues, although Volvo saw strong demand for the XC70 long-range plug-in hybrid SUV in China, helping the company increase its premium market share in the region.
Chief Executive Officer Håkan Samuelsson said the company’s cost and cash plan has helped stabilize operations and set the foundation for growth. “Our actions in 2025 have set us on a path to return to volume growth and improved cash flows,” he said.
Looking ahead, Volvo Cars plans to strengthen its electrified portfolio in 2026, led by the upcoming fully electric EX60 mid-size SUV, which has received strong initial customer interest. Deliveries of the EX60 are expected to ramp up in the second half of the year, alongside continued growth from models such as the EX90, EX30, and XC70.
However, the company warned that 2026 will remain challenging due to pricing pressure, regulatory uncertainty, tariffs, and weaker consumer sentiment. Volvo also expects temporary negative cash effects in early 2026 due to inventory build-up at its Torslanda plant.
Volvo Cars aims to return to volume growth in 2026 and improve cash generation, with long-term targets of achieving EBIT margins above 8 per cent and sustained profitability driven by electrified vehicles.
