Swedish automaker Volvo Cars has announced a cost-cutting initiative worth 18 billion Swedish krona (€1.6 billion), following a drop in its operating profit during the first quarter of the year.
According to the company’s earnings statement, Volvo’s operating income (excluding joint ventures and associates) dropped by over 70 per cent during the first quarter of the year.
The initiative announced on April 29 included SEK 3 billion (274 million) in variable cost reductions, SEK 5 billion (€445 million) in indirect spending efficiencies. An additional SEK 10 billion (€890 million) in cash-flow improvements were also planned, aimed at reducing working capital and capital expenditures in 2025 and 2026.
As part of its restructuring, Volvo also revealed global workforce reductions but did not specify the number of employees or consultants to be affected.
“There will be redundancies across our global operations but we will provide more details as soon as possible,” the company stated.
On April 18, Volvo had already announced plans to lay off up to 800 workers at three US facilities over the next three months, citing ongoing market uncertainty.
Volvo Cars CEO Håkan Samuelsson acknowledged the severity of the current climate: “The automotive industry is going through an extremely challenging period, unlike anything we’ve seen before.
“Given the turbulence in the market, we need to further improve our cash flow generation and lower our costs. While we still have a lot to do, our direction going forward is focused on three areas: profitability, electrification and regionalisation,” he said.
As part of this strategic shift, Volvo planned to concentrate its efforts on the US and Chinese markets, aiming to produce more vehicles closer to “where they are sold”, which may come at the expense of its European operations.
Speaking with US cable news channel MSNBC on April 29, Samuelsson said there were headwinds in the auto industry market.
The company warned that 2025 would be a transitional and difficult year, marked by macroeconomic, geopolitical and market uncertainties.
“Tougher market conditions, declining volumes, increased pricing pressures, and tariffs are all taking a toll on profitability,” Volvo said.
Vehicle manufacturer Volvo has had a bad first quarter, reporting sales that were lower than expected. https://t.co/NEoD8zVPB5
— Brussels Signal (@brusselssignal) April 23, 2025
