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The Swedish automaker reported a third-quarter operating loss of 3.7 billion Swedish crowns, reversing a year-earlier profit of 5.8 billion crowns, as weak EV demand, tariff pressures and deteriorating conditions in China weigh on its business.
Volvo Cars shares plunged nearly 30 per cent on Friday after the Swedish automaker reported a much bigger-than-expected third-quarter operating loss and announced plans to cut another 2,500 jobs as part of an intensified cost-cutting drive.
The company reported an operating loss of 3.7 billion Swedish crowns ($373 million) for the third quarter of 2026, compared with an operating profit of 5.8 billion crowns a year earlier. Analysts polled by Citi had expected a loss of 724 million crowns, according to Reuters.
The latest job cuts will affect around 2,000 positions in Sweden and another 500 globally. The reductions will be carried out through the termination of consultant contracts, natural attrition and targeted exit packages, with the process expected to be completed by mid-2027.
The cuts come on top of 3,000 job reductions announced earlier, as Volvo steps up efforts to restore profitability amid mounting pressure on the global automotive industry.
Volvo steps up cost-cutting drive
Chief Executive Officer Hakan Samuelsson said the third quarter had been disappointing and that the company’s turnaround plan required stronger measures.
Alongside previously announced cost reductions worth 23 billion Swedish crowns, Volvo plans to cut indirect spending and variable costs by a further 5 billion crowns. The additional savings are expected to be realised by the end of 2027.
More from BusinessThe company employs a range of cost-control measures as it navigates uneven demand for electric vehicles, rising tariff pressures and challenging market conditions in China.
Samuelsson told Reuters that Volvo could consider further measures if its turnaround plan fails to deliver the expected results.
China’s strategy shifts towards profitability
Volvo, majority-owned by China’s Geely Holding, is also changing its approach to the Chinese market, where domestic automakers have intensified competition through aggressive pricing.
The company said it would prioritise margins over market share in China rather than engage in a price war with local rivals. It plans to adopt a similar approach in the United States.
Volvo’s gross margin declined to 14.7 per cent in the third quarter from 20.4 per cent a year earlier, underscoring the pressure on profitability. Earlier this month, the automaker withdrew its full-year guidance for sales volumes and cash flow, citing a more challenging business environment.
The latest developments add to a difficult year for Volvo’s investors. The company’s shares hit a record low this week and have fallen by more than two-thirds so far in 2026.
