Yesterday, Volvo Cars reported a group operating profit (EBIT) of SEK -10.0 billion for the second quarter of 2025. This is due to the challenging automotive market and the Trump administration’s import tariffs. That’s why Volvo will also build its XC60 best-seller in the U.S.

“The result reflects a continued challenging environment for the automotive industry. Still, the SEK 18 billion cost and cash turnaround plan is fully on track, and the company is confident about more positive effects from the program,’ the Volvo press release states.

Volvo’s Q2 result is impacted by the previously announced one-off non-cash impairment charge of SEK 11.4 billion (€1.01 billion), as Volvo Cars is adjusting the financial assumptions for the EX90 and ES90 platform because of market circumstances, the impact of import tariffs on ES90 and EX90 profitability, and previous delays for the EX90.

Additionally, the result is impacted by the one-time restructuring cost of SEK 1.4 billion (€124 million), linked to the previously announced reduction of 3,000 headcounts. Excluding items affecting comparability, Volvo Cars reported an operating profit of SEK 2.9 billion (€257 million) and an operating profit margin of 3.1%.

Sales and revenues down

In terms of retail sales, the company sold 181,600 cars in the second quarter, representing a 12% decline compared to the same period in 2024. For the first six months, sales are down 9% compared to the same period in 2024. Revenues in Q2 came in at SEK 93.5 billion (€8.3 billion) and the group EBIT of SEK -10.0 billion (€886 million) translated into an operating profit margin of -10.6 %.

“The market continued to be challenging in Q2 as well,” said Håkan Samuelsson, the President and CEO of Volvo Cars, who was called in again in March when the first dark financial clouds gathered above Volvo Cars.

“Demand remains under pressure from the macroeconomic environment, tariff-related uncertainties, and tougher competition. However, our turnaround actions are starting to show results. In a Q2 market with headwinds, we made a clear improvement in free cash flow versus Q1, and our EBIT margin, excluding items affecting comparability, was slightly higher.”

Turnaround plan

Earlier this year, the company launched a SEK 18 billion (€1.6 billion) cost and cash turnaround plan. “This is starting to have an impact, with the full effects coming in 2026. The plan supports the company’s strategic direction, which rests on three pillars: profitability, electrification, and regionalisation,” Volvo explains.

“Looking at profitability first, the turnaround plan is on track. The reduction of 3,000 positions globally is being implemented, and approximately 1,100 people have already left Volvo Cars. Together with spending cuts, this will lower its indirect cost base and establish a leaner and more efficient organisation,’ the press release continues.

In terms of direct cost reductions, the company has initiated several actions to reduce material costs. One element is to utilise more synergies within the Geely group by collaborating on procurement. Another synergy area is the development of new car models, especially for the Chinese market. Volvo Cars has also effectively implemented cash actions, including reducing working capital and slowing investment pace.

“The company’s investment volume will ease off as planned, as Volvo Cars has made almost all major investments related to its new product architecture. This will deliver significant future cost reductions and performance improvements thanks to mega-casting, cell-to-body battery technology, and more efficient, in-house developed e-motors,” Volvo explains.

The first car on this new architecture is the all-new electric Volvo EX60, a vehicle for the company’s most important and best-selling segment. “It will deliver improved performance and lower product costs necessary for Volvo Cars’ continued transformation towards full electrification.”

Also PHEV

Meanwhile, Volvo Cars will also refresh its plug-in hybrid (PHEV) cars to offer an attractive bridge solution for customers and areas where the charging infrastructure is still weak. The company will soon launch its first extended-range PHEV, the XC70, and start production during the third quarter. “It is an answer to a growing demand for such powertrains, and it will first be offered in China, where Volvo Cars sees big opportunities for this car,” Volvo says.

“The XC70 is a good example of regionalisation, the third pillar. With globalisation in retreat, Volvo Cars is adapting to a more regionalised world. The company is empowering its three key regions to be more adaptive to regional requirements and customer preferences to be able to accelerate profitable growth.”

“Volvo Cars is implementing a new governance model for its China operations, with a clear regional performance, operational, and decision-making responsibility. In the Americas, a dedicated governance model will also be introduced.”

XC60 will also be made in the U.S.

To increase the utilisation of its Charleston plant and reduce the effects of import tariffs, Volvo Cars will introduce local assembly of the best-selling XC60 SUV in the U.S.

Volvo Cars announced that it will add the XC60 mid-size SUV to the production line of its U.S. car plant in Ridgeville, outside Charleston, South Carolina. “The state-of-the-art facility, which also assembles the fully electric flagship EX90, is scheduled to start XC60 production in late 2026,” Volvo adds.

The XC60 has been the company’s best-selling model globally for years and is also the most popular Volvo model among US customers. In the first six months of 2025, XC60 sales in the US rose by almost 23%.

“Adding the XC60 to our Charleston production line will further strengthen its position and attractiveness in the competitive U.S. market, while supporting and creating American manufacturing jobs,” says Samuelsson. “It is also in line with our ambition to build where we sell and reinforces our long-term commitment to the U.S. market, where we are celebrating our 70th anniversary and have sold over 5 million cars.”

In addition to its popularity in the US, the XC60 holds global significance for Volvo Cars as well. It recently surpassed the 240 wagon as its all-time best-selling model, with more than 2.7 million XC60s now on global roads.

In Europe, the company recently announced plans to build the new Polestar 7 at the new Kosice plant, currently under construction in Slovakia. It will be the second car to be built in Kosice, following a yet-to-be-announced next-generation Volvo model. The EX60?