Volvo Cars is cutting about 2,500 jobs after swinging to a third-quarter loss

Volvo Cars, which is majority owned by China’s Geely Holding, said it will cut about 2,500 jobs after reporting a third-quarter operating loss of 5.6 billion kronor ($590 million) on Friday. That compares with operating income of 6.4 billion kronor a year earlier.

Revenue fell to 66.9 billion kronor from 86.4 billion kronor. Operating income excluding joint ventures and associates and items affecting comparability was negative 3.7 billion kronor, versus 5.8 billion kronor a year earlier, for an EBIT margin of -5.6% against 6.7%. Free cash flow was negative 8.9 billion kronor, compared with negative 4.3 billion kronor. Basic earnings per share were negative 1.63 kronor, versus 1.75 kronor.

Of the 2,500 jobs, 2,000 are in Sweden, the company said. It will let consultant agreements lapse, allow ordinary staff turnover to absorb some roles and offer targeted exit packages to selected employees. Volvo Cars aims to save another 5 billion kronor through lower variable expenses and indirect spending, layered over its earlier cost programs. The company said the full effect will come by the end of 2027, when indirect spend will be close to 25% lower than in fiscal 2024.

Revenue in China roughly halved from a year earlier, the company said, as Volvo Cars and other legacy premium brands were squeezed by upstart Chinese competitors and steep price-cutting across the market. In the U.S., tariffs and the removal of consumer incentives for electrified cars weighed on margins. The quarter also included a 1.1 billion kronor negative revaluation of CAFE credits tied to U.S. legislative changes and negative 0.9 billion kronor from recognizing Polestar’s second-quarter losses.

Volvo Cars stock was down about 27% on Friday.

"In the short term, with severely challenged volumes, we need to reinforce our turnaround plan with additional decisive actions, lowering our break-even point and improving cash flows to make us more resilient," CEO Håkan Samuelsson said in a statement.

Samuelsson told CNBC that Chinese consumers are looking for "domestic alternatives." "We need a new strategy in China... it has to be a more regional structure, a more empowered region, and we need regionally adapted cars," he said.

Volvo Cars withdrew its full-year sales volume and cash flow guidance this month after third-quarter sales fell 11% from a year earlier to 141,609 vehicles. The company said it would share details on further actions with its third-quarter results. The new cuts follow an earlier round of 3,000 positions, announced once Samuelsson was back at the helm in 2025, according to Reuters.

As part of its plan, Volvo Cars will concentrate production in five dedicated Volvo plants worldwide and is exploring multi-brand assembly with Geely at its Chengdu and Ghent plants. It plans 13 new cars through the end of 2030 and will reveal three of them in 2027: one for Europe and two China-specific models.