Volvo Cars to slash costs worth billions following weaker performance

Volvo Cars reported on Tuesday that its first-quarter operating profit fell sharply to SEK 1.9 billion (€0.2 billion), down from SEK 4.7 billion in Q1 2024, as revenue declined to SEK 82.9 billion (€7.6 billion) from SEK 93.9 billion (€8.6 billion). The EBIT margin halved to 2.3% from 5% year-on-year. The automaker said wholesale volumes were intentionally reduced in late 2024 to rebalance inventories, exacerbating the slowdown alongside broader auto-sector volatility and adverse foreign-exchange movements.

In response, Volvo will implement an SEK 18 billion “cost and cash action plan” targeting lower capital expenditure and global redundancies, though details on headcount cuts were not disclosed. The company also announced it will no longer provide annual or medium-term financial outlooks, citing the difficulty of forecasting in a volatile economic and geopolitical landscape.

With Donald Trump’s threat of a 25% U.S. tariff on vehicle imports and additional levies on auto parts looming, Volvo said it will accelerate efforts to produce more U.S.-market cars domestically by optimising its existing American manufacturing footprint. Despite these measures, shares slipped 0.5% on the Nasdaq Stockholm following the results.