Finance
Volvo Cars smashes profit forecasts as cost cuts deliver
Published by Global Banking and Finance Review
Posted on October 23, 2025
3 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on October 23, 2025
3 min readLast updated: January 21, 2026
Volvo Cars surpassed profit forecasts in Q3 due to strategic cost cuts, despite challenges like U.S. tariffs and competition, boosting shares significantly.
By Marie Mannes
STOCKHOLM (Reuters) -Volvo Cars smashed third-quarter profit forecasts on Thursday, despite tariffs and tough competition, as sweeping cost cuts delivered faster than expected results, sending its shares soaring as much as 40%.
Volvo's new management - led by CEO Hakan Samuelsson who returned earlier this year - has spent the past six months slashing costs to counter faltering profits.
The company cut 3,000 jobs, pulled guidance and slowed investments to offset pressure from U.S. tariffs, fierce competition and an EV market slowdown.
"What we're now seeing is really, wow okay, this is delivering faster than we thought and faster than we planned," Samuelsson said of the cost reductions.
CEO'S RETURN HERALDS CHANGE IN FORTUNES
Volvo Cars, based in Sweden but majority-owned by China's Geely Holding, said it made an operating profit before one-off costs of 5.9 billion Swedish crowns ($627 million) in July-September, soaring above analysts' consensus forecast of 1.6 billion crowns, according to Bernstein.
This was despite a 7% drop in sales, with fully electric cars still accounting for less than a quarter of the total.
Volvo Cars shares were up 32% at 0842 GMT, on track for one of their strongest daily performances on record and returning to levels not seen since July 2024.
The carmaker's gross margin rose to 24.4% from the previous quarter's 17.7%. Samuelsson told Reuters that was due to a facelift for the best-selling XC60 model, big savings from cooperation with Geely's supply chain, and the cost cuts.
"When Hakan rejoined as CEO I think he came in with open eyes, very much switching the focus for the group from growth and market share to cash flow and profitability," said Handelsbanken analyst Hampus Engellau.
"This result is very much internally generated from the operations of the management team, they haven't had much help from the market."
French rival Renault also reported quarterly results above expectations on Thursday.
VOLVO SEES LOWER PROFIT IMPACT FROM 'TARIFF ROLLER COASTER'
With most of its U.S.-bound cars produced in Europe, Volvo has been heavily impacted by U.S. import tariffs. However, it has recently taken steps to move production of some hybrids to America in the coming years.
Recent trade negotiations between the European Union and the U.S. resulted in a reduction of U.S. tariffs on European cars to 15% from August 1 retroactively, from 27.5% previously.
Finance Chief Fredrik Hansson told analysts that because of this - and rising prices of its cars - the company now saw a slightly smaller impact than feared from the tariffs to its full-year earnings before interest and tax.
"We see roughly a 1% group EBIT drop from the tariff roller coaster," Hansson said, against a previously expected 1-2% hit.
($1 = 9.4155 Swedish crowns)
(Reporting by Marie Mannes. Editing by Mark Potter)
Profit is the financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in maintaining those activities.
Cost-cutting strategies are measures implemented by companies to reduce their expenses and improve profitability, often involving layoffs, reducing operational costs, or streamlining processes.
Operating profit is the profit a company makes from its core business operations, excluding deductions of interest and taxes.
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