Volvo Cars Q4 profit slumps on tariffs, weak demand
Volvo Cars reported a sharp drop in fourth-quarter profit, as tariffs and weak market demand weighed on results, with the Sweden-based automaker warning on Thursday that external pressures remain a challenge.
Operating profit excluding items affecting comparability fell 68% to 1.8 billion Swedish crowns ($199.9 million), down from 5.6 billion crowns a year earlier, after sales declined by 16%, News.Az reports, citing Reuters.
Volvo Cars is majority-owned by Geely Holding.
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“External factors affected our performance, such as EU–U.S. import tariffs and the negative currency effect of a stronger Swedish krona,” Chief Executive Hakan Samuelsson said in a statement. “On top of that, revenues were impacted by weak demand putting pressure on pricing, and the removal of EV incentives in the U.S., which negatively affected sales.”
Analysts at J.P. Morgan said in a note to clients that both profits and sales came in below market expectations.
U.S. President Donald Trump last year raised import tariffs on cars from the European Union to 27.5% from 2.5% as part of efforts to reshape Washington’s global trade relationships. Following trade negotiations, the tariff rate was later reduced to 15% and applied retroactively from August 1.
Volvo Cars exports most of its vehicles sold in the U.S. from Europe. The company’s gross margin—a key metric tracked by analysts to gauge the impact of tariffs—fell to 15.8%, compared with 20.4% in the third quarter and 17.1% a year earlier.
Despite the weak performance, Volvo Cars said it is targeting a return to year-on-year volume growth in 2026 and that its ongoing turnaround plan remains on track.
“We have a long list of cost-saving ideas which we are yet to execute,” Chief Financial Officer Fredrik Hansson told Reuters. He added that potential synergies and cooperation with Geely to cut costs—particularly on mechanical components—are still largely untapped.
The company also said it would not propose a dividend for 2025.
By Nijat Babayev
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