Geely-owned Volvo Cars has said its performance remained under pressure in the first quarter of 2026, pointing to a challenging external environment while also reporting developments in its electrification plans.
Group operating income (EBIT) was Skr1.6bn ($172.4m), compared with Skr1.9bn, and the EBIT margin was 2.2%.
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Revenue fell by 12% to Skr72.6bn, while net income declined 26% to Skr0.7bn.
“The decrease was primarily explained by foreign exchange rate effects, driven by a stronger Swedish krona compared to prior year, as well as by sales mix and pricing,” the group said.
For EBIT, it added: “The decrease was mainly attributable to sales mix and pricing, US tariffs on imported goods as well as depreciation and amortisation, offset by variable and indirect cost driven by the cost and cash action plan.”
Basic earnings per share increased to Skr0.54 from Skr0.40.
Retail sales were down 11% year-on-year (YoY) to 153,300 cars.
The company said electrification remained a growth area.
Sales of fully electric vehicles (BEV) rose 12% and accounted for 24% of total sales, up from 19% a year earlier.
Combined electrified vehicle sales, including BEV and PHEV models, reached 47% share, compared with 43% in the same period last year.
During the quarter, production of the fully electric EX60 started, with customer deliveries expected “soon”.
Volvo Cars said orders were higher than expected and that margins on those orders were also above initial projections.
The company said the model is expected to broaden its addressable BEV market.
Volvo Cars CEO Håkan Samuelsson said: “The first quarter of 2026 shows a divide between what we can control and a very challenging external environment.
“The areas we can control continued to improve in Q1. Our BEV share increased to a class-leading level and we delivered a strong momentum in our cost and cash actions.”
By region, Europe delivered relatively strong performance, including a “record” quarter in the UK, while the US and China remained difficult markets.
In the US, demand was affected by lower incentives and weaker consumer confidence.
In China, Volvo Cars said it encountered stronger competition in pricing and new product launches, though it kept overall market share and increased its PHEV share.
Globally, the passenger car market fell 6% YoY in the quarter, while the premium segment declined 5%.
The BEV and PHEV segments decreased by 9% and 16% respectively, which the company said reflected uneven electrification trends and changing government incentives.
For the full year, Volvo Cars expects volumes to improve, supported by the EX60, although profitability in the second quarter will be affected by continuing headwinds and production ramp-up.
The company said it is maintaining its ambition for full year volume growth and cash flow.
