Headlines
Volvo Cars ramps up profit margin goal as pursues strategy reset
Published by Global Banking and Finance Review
Posted on November 6, 2025
3 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 6, 2025
3 min readLast updated: January 21, 2026
Volvo Cars aims for an 8% profit margin, adjusting its electrification plans and collaborating with Geely for cost savings.
By Marie Mannes
STOCKHOLM (Reuters) -Volvo Cars said on Thursday it was targeting a long-term operating profit margin of more than 8% as part of its strategy overhaul, which includes reworking its electrification plans and making hybrid cars for longer.
The Swedish automaker last year scrapped its target of going all-electric by 2030, saying it would continue to introduce hybrids amid a slowdown in demand for fully electric vehicles.
With most of its U.S.-bound cars made in Europe, Volvo has been heavily impacted by President Donald Trump's import tariffs, but recently took steps to move production of some hybrids to the United States.
Volvo CFO Fredrik Hansson told Reuters ahead of an investor day on Thursday that the automaker was not putting a timeframe on the new goal but its work with Geely and cost cuts were expected to deliver 2-3 percentage points of margin improvement.
Hansson said that employing the same software as majority-owner Geely and using the Chinese conglomerate's hardware suppliers are among the key elements of the $1.9 billion cost-saving programme Volvo launched in April.
Volvo is also aiming to include Geely brands into some of its manufacturing operations, such as producing a Polestar in its new plant in Slovakia.
"The heart of the Geely collaboration is really common sourcing, common suppliers and really leveraging the fact that Geely is the third largest car player in the world," he said.
"We are ready to go fully electric when our customers are. But we also know the development is different in different regions. So we need a longer bridge," Hansson added.
DEEPER COOPERATION WITH CHINA'S GEELY
Volvo brought back former CEO Hakan Samuelsson in early 2025, a close confidant of Geely-owner Li Shufu, for a two-year term to revive a record-low share price, quickly launching cost savings and cutting 3,000 white-collar jobs.
This also included ditching Volvo's then-outlook such as achieving a 2026 full-year core operating profit margin of 7-8% and generating a strong positive free cash flow. Its margin stood at 5.6% last year.
Last month, Samuelsson presented stronger-than-expected third-quarter profits, driving Volvo shares 40% higher. The stock was up 1.3% at 0808 GMT on Thursday.
(Reporting by Marie Mannes, writing by Terje Solsvik and Niklas Pollard; editing by Louise Heavens and Alexander Smith)
Profit margin is a financial metric that indicates the percentage of revenue that exceeds the costs of goods sold. It shows how efficiently a company is managing its expenses.
Hybrids refer to vehicles that use two or more types of power, typically combining an internal combustion engine with an electric motor to improve fuel efficiency and reduce emissions.
Electrification in the automotive industry refers to the process of replacing conventional internal combustion engines with electric motors, often involving the use of batteries or fuel cells.
A cost-saving initiative is a strategy implemented by a company to reduce expenses and improve financial performance, often involving operational efficiencies or resource optimization.
Core operating profit margin is a measure of a company's profitability that focuses on its core business operations, excluding non-operational income and expenses.
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