Automaker launches $1.9 billion cost-cutting plan
Mikael Sjoberg | Bloomberg | Getty Images
Volvo Cars, a Swedish automaker owned by China’s Geely Holding, has announced cost-cutting plans of 18 billion Swedish krona ($1.87 billion) and has withdrawn financial guidance due to a sharp decline in operating profit in the first quarter of the year.
In the first quarter, Volvo Cars reported an operating profit of 1.9 billion krona, down from 4.7 billion krona in the same period last year. The company’s margin on earnings before interest and taxes (EBIT) narrowed to 2.3% from 5% a year earlier, with revenue falling to 82.9 billion krona from 93.9 billion krona in the first quarter of 2024.
The decline in wholesales, adverse currency effects, and industry turbulence were cited as reasons for the results. Volvo Cars’ “cost and cash action plan” will involve reductions in investments and job cuts globally.
The company is no longer providing financial guidance for 2025 and 2026, citing market challenges such as tariffs. Volvo Cars CEO Håkan Samuelsson emphasized the need for a U.S. trade deal to support the business in the U.S.
Volvo Cars aims to increase its sales share of electrified cars, with a target of 90% to 100% of global sales volume being electric by 2030.
