Volvo Cars reports first operating loss since 2021 IPO

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Volvo Cars has reported its first operating loss since its 2021 stock market listing in Stockholm as higher US tariffs and restructuring costs hurt its profitability. 

The Swedish group, owned by China’s Geely, reported on Thursday an operating loss of SKr10bn ($1bn) for the April to June quarter, compared with a profit of SKr8bn a year earlier and an average analyst estimate of a profit of SKr2.3bn, according to S&P Capital IQ. 

Revenue also declined 8 per cent to SKr 93.5bn as retail sales declined in markets including Europe and China.

“Demand remains under pressure from the macroeconomic environment, tariff-related uncertainties and tougher competition,” said chief executive Håkan Samuelsson in a statement. “This all continues to put pressure on volumes and profitability for us, as well as for the entire automotive sector.”

The results from Volvo Cars kick off what analysts expect to be a challenging earnings season for the automotive industry as companies grapple with the fallout of US President Donald Trump’s trade war.

Earlier in the week, the company warned of a one-off charge of SKr11.4bn and said it had been unable to sell its new ES90 — which is built in China — profitably in the US because of Trump’s 25 per cent tariff on imports of foreign-made cars.

In addition to its high exposure to tariffs, Volvo Cars has struggled with launch delays and software issues with its flagship EX90 sport utility vehicle.

Excluding the one-off charge, however, Bernstein analyst Harry Martin noted that the company’s results were better than expected as it sold more emissions credits in the second quarter than in the whole of 2024. Rival carmakers lagging behind in sales of electric vehicles have bought credits from Volvo Cars to meet the EU’s tough emissions regulations. 

To address the deteriorating business environment, the company has announced 3,000 job cuts globally to save costs.

It is also increasing production in South Carolina to offset the tariffs and revealed on Wednesday that it would start producing its XC60 mid-size SUV in the US from late 2026.