Volvo Cars Q1 2025 Revenue Falls 12%, Launches SEK 18B Cost Plan

Volvo Car AB (ST:VOLCARb) reported a 12% drop in revenue for the first quarter of 2025, hit by challenging market conditions. Revenue fell to SEK 82.9 billion from SEK 93.9 billion in Q1 2024, while operating income excluding joint ventures and associates plunged to SEK 1.9 billion from SEK 6.8 billion. The EBIT margin dropped sharply to 2.3% from 7.2% a year earlier, and basic earnings per share fell to SEK 0.40 compared to SEK 1.12.

Retail sales slipped 6% to 172,219 vehicles, impacted by a 19% drop in wholesale volumes due to planned inventory reductions and currency pressures. Despite lower sales, Volvo (OTC:VLVLY) improved its free cash flow through stronger working capital management and the sale of its stake in Lynk & Co.

In response, the Swedish automaker announced an SEK 18 billion cost and cash action plan, aimed at enhancing operational efficiency and profitability. The plan includes SEK 3 billion in variable cost cuts, SEK 5 billion in indirect spending savings, and SEK 10 billion in cash flow improvements over two years, with the main effects expected in 2026.

CEO Håkan Samuelsson emphasized the need for improved results amid industry turbulence, stressing a focus on cash flow and cost reduction. Electrification remains a priority, with fully electric vehicles accounting for 19% of Q1 sales, down from 21% last year, while the share of electrified models rose to 43%.

Volvo Cars warned that 2025 will be challenging due to macroeconomic headwinds, price competition, and tariffs, and said it will not issue financial guidance for 2025 and 2026. The company remains committed to long-term goals of profitability, electrification, and regionalization.