Swedish auto giant Volvo Cars reported on Tuesday that it would be slashing 18 billion krona (€1.7bn) worth of costs, following its operating profit for the first quarter of the year falling significantly.
The company, which is owned by China’s Geely Holding, recorded an operating profit of 1.9bn krona (€0.2bn) in Q1 2025, in contrast with 4.7bn krona (€0.4bn) in the corresponding period in 2024.
Similarly, revenue dropped to 82.9bn krona (€7.6bn) in the first quarter of this year, down from 93.9bn krona (€8.6bn) in the same quarter last year. Earnings before interest and taxes (EBIT) margin came up to 2.3% in the first three months of the year, down from 5% in the same period in 2024.
The company has attributed these weaker figures to a fall in wholesales, mainly because of a planned decrease in inventory in the last quarter of 2024. Wider global auto industry turbulence, as well as fluctuating foreign currency also had an impact on the first quarter results.
Volvo Cars shared that its “cost and cash action plan”, as this cost-cutting drive is being called, will include decreases in investments, as well as worldwide redundancies. However, no other details were revealed about how many layoffs could happen.
The company revealed that it would be focusing more on its US products to enhance growth and look into how it can optimise its existing production facilities in the US. This is in order to eventually produce more US-sold cars within the country.
It also revealed that it would not be sharing financial outlooks for both this year and next year anymore. This is mainly because of the difficulty of accurately predicting business performance in an increasingly volatile economic and geopolitical environment, especially with US tariffs.
Trump's looming 25% tariffs on car imports is another concerning factor for Volvo Cars at the moment, along with the US’s upcoming 25% tariffs on certain auto parts. However, Volvo Cars’ share price dropped 0.5% around 12:15pm CEST on the Nasdaq Stockholm exchange.
