Automaker expects stronger second-half sales, positive cash flow toward year-end
Swedish automaker Volvo Cars abandoned its goal of increasing vehicle sales this year after a sharper-than-expected downturn in China weighed on its second-quarter earnings.
The company, majority-owned by China’s Zhejiang Geely Holding Group, reported operating income of 826 million Swedish kronor ($85.5 million) in the April-June period, below analysts’ average forecasts.
Profitability was pressured by intense price competition, higher freight and raw-material costs, an unfavorable sales mix and expenses related to the production ramp-up of the fully electric EX60 sport utility vehicle.
Quarterly revenue fell to about $8.1 billion from approximately $9.7 billion in the same period last year, while vehicle sales volumes declined 5.6% year-on-year. The operating profit margin stood at 1.1%.
Chief Executive Officer Hakan Samuelsson said the Chinese market had deteriorated faster than the company expected, amid political uncertainty and weak consumer confidence.
Volvo Cars consequently dropped its previous ambition of delivering full-year volume growth. Samuelsson said a further deterioration in global markets remained the main risk to the company’s second-half performance.
Despite the weak quarter, the automaker expects sales to be “significantly stronger” during the second half of 2026, supported by growth in Europe and a continued recovery in the US, while conditions in China are expected to remain challenging.
The company also expects strong positive free cash flow toward the end of the year and aims to finish 2026 approximately at break-even.
Volvo Cars said it had delivered about $518 million in indirect and variable cost savings this year, reaching its full-year target six months ahead of schedule. The reductions came on top of approximately $830 million in savings achieved last year.
The measures included structural changes and a reduction of about 3,000 positions compared with the first half of 2025.
The share of fully electric vehicles in Volvo’s quarterly sales rose to 25% from 21% a year earlier, while electric and plug-in hybrid vehicles together accounted for 52% of sales, up from 44%.
Fully electric vehicle sales in Europe, including Türkiye, increased 23%, supported by demand for the EX30 and EX90. Production of the EX60 began in Sweden in April, with the first customer deliveries starting earlier this month.
Volvo Cars shares fell as much as 10.6% in early Stockholm trading following the weaker-than-expected results.