Volvo Cars today reports a group operating profit (EBIT) of SEK -10.0 billion for the second quarter of 2025. The result reflects a continued challenging environment for the automotive industry. Still, the SEK 18 billion cost and cash turnaround plan is entirely on track, and the company is confident that it will yield more positive effects from the programme.
The result is impacted by the previously announced one-off non-cash impairment charge of SEK 11.4 billion, as Volvo Cars is adjusting its financial assumptions for the EX90 and ES90 platforms due to market circumstances, the impact of import tariffs on the profitability of the EX90 and ES90, and previous delays for the EX90.
Additionally, the result is impacted by the one-time restructuring cost of SEK 1.4 billion, linked to the previously announced reduction of 3,000 headcounts. Excluding items affecting comparability, Volvo Cars reported an operating profit of SEK 2.9 billion and an operating profit margin of 3.1%.
In terms of retail sales, the company sold 181,600 cars in the second quarter, a 12 per cent drop compared to the same period in 2024.
For the first six months, sales are down 9% compared to the same period in 2024. Revenues came in at SEK 93.5 billion, and the group EBIT of SEK -10.0 billion translated into an operating profit margin of -10.6 per cent. More details about its second-quarter performance can be found in Volvo Cars’ full financial report.
Earlier this year, the company launched a SEK 18 billion cost and cash turnaround plan. This is starting to have an impact, with the full effects expected to be realised in 2026. The plan supports the company’s strategic direction, which rests on three pillars: profitability, electrification, and regionalisation.
Looking at profitability first, the turnaround plan is on track. The reduction of 3,000 positions globally is being implemented, and approximately 1,100 people have already left Volvo Cars. Together with spending cuts, this will lower its indirect cost base and establish a leaner and more efficient organisation.
In terms of direct cost reductions, the company has implemented several initiatives to lower material costs. One element is to utilise more synergies within the Geely group by collaborating on procurement.
Another synergy area is the development of new car models, especially for the Chinese market. Volvo Cars has also effectively implemented cost-saving measures, including reducing working capital and slowing the investment pace.
The company’s investment volume will ease off as planned, as Volvo Cars has made almost all significant investments related to its new product architecture.
This will deliver substantial future cost reductions and performance improvements thanks to mega-casting, cell-to-body battery technology and more efficient, in-house developed e-motors.
The first car on this new architecture is the all-new, battery-electric Volvo EX60, a car for the company’s most important and best-selling segment. It will deliver improved performance and lower product costs, which are necessary for Volvo Cars’ continued transformation towards full electrification.
Most analysts expect demand for fully electric cars to continue growing and surpass that of traditional combustion engine cars by 2030. Consequently, most of the company’s development efforts remain firmly focused on electrification.
Meanwhile, Volvo Cars will also refresh its plug-in hybrid (PHEV) cars to offer an attractive bridge solution for customers and areas where the charging infrastructure is still weak.
The company will soon launch its first extended-range PHEV, the all-new XC70, and start production during the third quarter. It is an answer to a growing demand for such powertrains, and it will first be offered in China, where Volvo Cars sees significant opportunities for this car.
The XC70 is a good example of regionalisation, the third pillar. With globalisation in retreat, Volvo Cars is adapting to a more regionalised world.
The company is empowering its three key regions to be more adaptable to regional requirements and customer preferences, enabling them to accelerate profitable growth.
Volvo Cars is implementing a new governance model for its China operations, with clear regional performance, operational, and decision-making responsibilities. In the Americas, a dedicated governance model will also be introduced.
To increase the utilisation of its Charleston plant and to reduce the effects of import tariffs, Volvo Cars will introduce local assembly of the best-selling XC60 SUV in the US.
In Europe, the company recently announced plans to build the new Polestar 7 at the new Kosice plant, which is currently under construction in Slovakia. It will be the second car to be built in Kosice, following a yet-to-be-announced next-generation Volvo model.
While 2025 will remain challenging, the company’s SEK 18 billion turnaround plan is entirely on track. Volvo Cars has seen a positive effect already in the second quarter and is confident about further positive effects from the programme.
Commercially, the company will maintain a sharp focus on driving sales, including ramping up sales of the EX30 and the born-electric cars in the 90 Series.
The EX30 is now manufactured in the Ghent factory, which reduces the impact of tariffs. The EX90 is now ready to meet the requirements of demanding premium customers, having undergone significant software upgrades.
The ES90 all-electric sedan is set to hit the market this autumn, and the XC70 will propel Volvo Cars into a new, growing segment for long-range PHEV cars.
The development of the EX60 is entirely on track. It will strengthen the company’s all-electric lineup next year as it enters the largest and most popular segment of fully electric vehicles. This will improve its position and underpin its growth potential in the EV market.
When market sentiment improves, Volvo Cars expects to be well-positioned for profitable growth, with a future-proof product lineup as well as a leaner and more efficient organisation.