Volvo Cars shares drop 24% after CEO warns of China sales slump

Volvo Cars’ shares fell 24.2% on Friday after the Swedish automaker announced a 2,500‑person global layoff plan and warned that its Chinese sales slump “came faster than we thought.” The announcement came as the company reported a third‑quarter operating loss of 5.6 billion Swedish kronor ($564 million), a sharp reversal from a 6.4 billion‑krona profit a year earlier.

The loss reflects a deteriorating market environment in both China and the United States. In China, Volvo’s revenue dropped almost 50% year‑on‑year as premium brands face “hyper‑competition” from new domestic rivals that are winning over consumers with locally developed models and aggressive pricing. In the United States, tariffs and dwindling incentives for electric vehicles have squeezed margins. The automaker, owned by China’s Geely Holding, said the tougher conditions have eroded free cash flow and forced a reassessment of its global sales strategy.

Volvo’s chief executive Håkan Samuelsson told CNBC that the company must adopt a more regional structure and develop cars tailored to local markets. He said future models will need to share platforms with Geely and incorporate software developed in China, including infotainment and driver‑assistance systems, if Volvo hopes to compete there. To match the new strategy, Volvo plans to cut 5 billion Swedish kronor in costs and eliminate 2,500 jobs, with 2,000 of those cuts in Sweden, while streamlining its central administration.

The move signals a broader shift among Western carmakers struggling in China’s fast‑changing market. Analysts say Volvo’s pivot to regional autonomy and deeper integration with Geely could determine whether it regains footing in the world’s largest auto market. The job cuts and cost‑saving measures are expected to take effect over the next few months, and investors will watch closely to see if the new approach can reverse the steep sales decline and restore profitability.