Volvo Car AB (publ.)

Retail sales fell 6% year over year, with China doing most of the damage. Revenue was down from SEK 93 billion last year, which included a SEK 3.3 billion one-off U.K. subscription portfolio sale, and the quarter was also hit by lower volume in China, weaker mix/pricing, FX headwinds, and less CO2-credit revenue. EBIT was SEK 0.8 billion, or a 1.1% margin, versus 3.1% underlying EBIT margin last year excluding an impairment. BEV sales were up 14%, BEVs were 25% of sales, and electrified vehicles were 52% of sales. Management expects significantly stronger sales in the second half versus the first half, around 10% stronger growth in H2 than H1 sales, plus or minus about 5% depending on China, with full-year cash flow expected to end approximately at break-even.

Håkan Samuelsson framed the quarter as difficult because of weak consumer confidence, geopolitical uncertainty, and a much sharper-than-expected decline in China. He emphasized that Volvo will focus on what it can control: costs, electrification, and regionalized products for China, the U.S., and Europe. His tone was confident about the strategy, pointing to EX60 demand, the Ghent MOU, software/AI upgrades, and a September 17 strategy update as evidence the company is building a stronger long-term position.

Fredrik Hansson said the quarter was tough, with retail sales down 6%, revenue lower because of volumes, mix, FX, and fewer CO2-credit sales, and EBIT down to SEK 0.8 billion from 3.1% underlying EBIT last year excluding the impairment. He highlighted that Volvo has already achieved over SEK 8 billion in cost savings year to date versus the SEK 5 billion full-year target, driven by variable cost and indirect spend actions. He also said cash flow was negative but planned, cash liquidity started the quarter at SEK 46 billion, investments were SEK 8 billion versus SEK 14 billion a year ago, and full-year cash flow is expected to end approximately break-even.

Analysts pressed management on how much of the H2 improvement will come from BEVs, China’s continued weakness, EX60 ramp timing and margin contribution, and whether Volvo will expand its cost program. Management said the second half strength should come primarily from BEVs, especially EX60, while China is expected to remain very difficult in the near term and pricing discipline will continue. On EX60, they said production is being stepped up through the year and should become fully margin positive toward year-end, with the 40,000-unit ambition for 2026 still intact. They also said Geely synergies are currently mainly procurement-related but will broaden into more component, hardware, and regional product collaboration.