Swedish carmaker Volvo Cars has unveiled plans to eliminate roughly 2,500 jobs worldwide as part of a restructuring drive, after swinging into a third-quarter operating loss of 3.7 billion Swedish kronor (€333 million) excluding the results of joint ventures and one-off accounting items.
The Gothenburg-based manufacturer, which is majority-owned by China’s Zhejiang Geely Holding Group, reported an operating loss of 5.6 billion kronor (€504 million) once those items were included, against a profit of 6.4 billion kronor (€576 million) in the same period last year.
Group revenues contracted by 23 per cent year-on-year to 66.9 billion kronor (€6.02 billion), driven down by a 10.7 per cent decline in global retail volumes.
Operating margin fell to minus 8.4 per cent, from positive 7.4 per cent a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) sank to 2.04 billion kronor (€184 million) from 12.13 billion kronor (€1.09 billion), compressing the EBITDA margin from 14 per cent to 3 per cent.
At the bottom line, the group posted a net loss of 5.73 billion kronor (€516 million), or minus 1.63 kronor (minus €0.15) per share, reversing the 4.51 billion kronor profit and positive 1.75 kronor per share recorded in the corresponding quarter last year.
According to reporting by Swedish business daily Dagens Industri, the bulk of the headcount reductions will fall on the company’s domestic operations in Sweden, where roughly 2,000 corporate, engineering and consultant roles face termination or voluntary redundancy. Volvo Cars said the full effect of the cuts would be felt by the end of 2027.
The company confirmed that direct contractor arrangements will be unwound first, alongside natural attrition and targeted exit packages.
The reversal highlights the squeeze facing European automotive manufacturers caught between Beijing’s hyper-competitive domestic market and Washington’s shifting subsidy and taxation regime.
Chinese financial daily Caixin noted that Volvo’s deliveries in mainland China fell by more than 40 per cent during the quarter, as domestic buyers increasingly opted for heavily discounted domestic electric vehicles from local rivals, while profitability in North America deteriorated following the expiration of federal electric-vehicle purchase incentives.
The company put the drop in its Chinese revenues at almost 50 per cent and said it expected the next two years there to remain difficult. It also booked a 1.1 billion kronor (€99 million) revaluation of its United States fuel-economy credits after a change in American legislation.
Compounding external demand shocks, internal operational bottlenecks have hobbled the carmaker’s electrification pipeline.
Slower-than-anticipated factory assembly and supply-chain snags surrounding the ramp-up of the EX60 electric SUV weighed on cash generation, pushing group free cash flow to negative 8.9 billion kronor (€801 million) for the quarter, from negative 4.3 billion kronor a year earlier.
Volvo Cars attributed the delay to its cell-to-body battery technology and said the model had already taken more than 50,000 orders in Europe.
“The third quarter of 2026 was a big disappointment and mirrors a year that has become significantly more challenging than we originally anticipated. Our ongoing turnaround plan therefore needs to be strengthened with strong action. The operating loss in the third quarter was driven by a negative market trend, mainly in China but also in the United States. In China, the market for established premium brands is in sharp decline as a result of intense competition from new Chinese alternatives, which has basically wiped out the profitability of the established premium brands,” chief executive Håkan Samuelsson said.
“We continue to operate in a very challenging environment with significant external challenges: deglobalisation, hypercompetition and climate change.”
“We are convinced that we have the right long-term strategy to meet these challenges. In the short term, with continued sharply squeezed volumes, however, we need a reinforced turnaround plan with further strong measures that lower our break-even level and improve cash flow to make us more resilient.”
In addition to the workforce cuts, Volvo’s management unveiled a further 5 billion kronor (€450 million) in structural expenditure cuts covering indirect spend and variable costs. Indirect spending is to run almost 25 per cent below its 2024 level by the end of 2027, with investment about 30 per cent lower than in 2024.
Shares in Volvo Car AB fell by about 30 per cent on the Stockholm exchange on October 23, touching a record low of close to 10 kronor, as institutional investors moved to digest the scale of the company’s operational burn and the withdrawal of its 2026 targets for volumes and cash flow.
The figures have landed as EU institutions prepare to decide how far to relax the bloc’s 2035 emissions target for new cars. MEPs are due to vote in Strasbourg on November 23 on the European Commission’s proposal to replace the original 100 per cent cut in fleet-average emissions with a 90 per cent reduction.
France and Germany agreed a joint position on October 16 that would spare carmakers the obligation to offset the remaining 10 per cent, in exchange for a requirement that 70 per cent of car components, batteries excluded, be made in Europe.
