Volvo Cars launches $1.9 billion cost-cutting power, scraps monetary steerage as profits fall

Swedish-based automaker Volvo Cars on Tuesday introduced cost-cutting plans of 18 billion Swedish krona ($1.87 billion) as its working benefit fell sharply within the first 3 months of the yr.

Volvo Cars, which is owned through China’s Geely Holding, reported first-quarter working benefit of 1.9 billion krona, down from 4.7 billion krona in the similar duration final yr.

Its margin on profits ahead of hobby and taxes (EBIT) narrowed to 2.3% from 5% a yr previous, whilst earnings fell to 82.9 billion krona within the first quarter, down from 93.9 billion krona in the similar duration of 2024.

The corporate mentioned the consequences mirror a drop in wholesales as a part of a deliberate stock aid all over the overall 3 months of 2024, hostile forex results and broader automobile trade turbulence.

Volvo Cars mentioned its so-called “cost and cash action plan” would come with discounts in investments and redundancies at its operations around the globe. The corporate didn’t supply additional data at the attainable scale of the layoffs however mentioned it will replace with “more details as soon as possible.”

Volvo Cars mentioned it’s not offering monetary steerage for each 2025 and 2026.

“There is a rather heavy headwind on the market, Volvo Cars CEO Håkan Samuelsson told CNBC’s “Europe Early Edition” in a Tuesday interview.

“There is a quantity drop, and on most sensible of that still price war, new avid gamers within the electrical phase, particularly the ones influencing costs normally. And on most sensible of that you’ve got the turbulence now with further price lists, so all of that makes it very tricky to expect the longer term.”

Samuelsson added that the company was focusing on what it can control via the cost action package.

In its earnings report, the company said it would sharpen its U.S. product line-up to focus on growth and explore how it could “higher use” its existing manufacturing footprint in the coming years, in order to produce “extra automobiles the place they’re bought.”

U.S. President Donald Trump imposed 25% tariffs on cars imported to the U.S. earlier this month. The White House has said it also plans to place tariffs on some auto parts such as engines and transmissions, which are set to take effect no later than May 3.

Volvo Cars’ sales share of “electrified automobiles,” which it defines as any car with a charging twine, hit 43% within the first quarter. It objectives for the class to constitute 90% to 100% of its international gross sales quantity through 2030.