Volvo Cars has said it expects profitability to improve in the second half of 2026, notwithstanding higher raw material costs and a steeper-than-anticipated downturn in China.
The Geely-owned manufacturer’s second quarter figures showed Skr5bn ($517.6m) in targeted full-year cost savings had been delivered, six months earlier than planned.
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Quarterly revenue came in at Skr77.67bn, down from Skr93.49bn in the same period of 2025, a figure that included a Skr4bn one-off positive effect.
Net income for the quarter was Skr417m, compared with a net loss of Skr8.10bn a year earlier.
Operating income (EBIT) stood at Skr826m, against a loss of Skr9.95bn in Q2 2025.
Fully electric vehicles made up 25% of sales, up from 21% a year earlier, while electrified models – including plug-in hybrids – accounted for 52%, up from 44%.
Overall volumes fell 5.6% year-on-year (YoY) in the quarter, although they rose compared with the first quarter of 2026.
The carmaker noted that the US market had begun to stabilise after a prolonged decline, with growth recorded in both May and June.
It expects this pattern to persist through the second half as the effects of withdrawn incentives on electrified vehicles fade.
Performance in Europe, its largest market, held up despite intensifying competition and softer pricing, the company said.
Battery-electric vehicle sales across the region, including Türkiye, climbed 23% YoY.
China, by contrast, saw a marked weakening in the second quarter that affected both Volvo Cars and the broader industry, the company said, while it also pointed to heightened global uncertainty stemming from the Middle East conflict.
The Skr5bn in indirect and variable cost reductions achieved so far this year follows Skr8bn in savings delivered in 2025.
Volvo Cars attributed the progress to structural changes, including a headcount reduction of around 3,000 roles compared with the first half of 2025.
Looking ahead, the company said it anticipates markedly stronger sales in the second half of the year relative to the first, driven by growth in Europe and ongoing recovery in the US, even as conditions in China remain difficult.
It expects strong positive free cash flow later in the second half, with the full year projected to finish close to break even.
The company is set to unveil two new models later this year as it expands its electrified range.
Volvo Cars president and CEO Håkan Samuelsson said: “In this very challenging external environment, we made progress on our strategic actions.
“This gives us the momentum and confidence that the second half of the year will improve compared to the first six months.”
