Mikael Sjoberg | Bloomberg | Getty Images
Swedish-based automaker Volvo Cars on Tuesday announced cost-cutting plans of 18 billion Swedish krona ($1.87 billion) as its operating profit fell sharply in the first three months of the year.
Volvo Cars, which is owned by China’s Geely Holding, reported first-quarter operating profit of 1.9 billion krona, down from 4.7 billion krona in the same period last year.
The company said the results reflect a drop in wholesales as part of a planned inventory reduction during the final three months of 2024, adverse currency effects and broader automotive industry turbulence.
Volvo Cars said its so-called “cost and cash action plan” would include reductions in investments and redundancies at its operations across the globe. The company did not provide further information on the potential scale of the layoffs but said it would update with “more details as soon as possible.”
Volvo Cars said it is no longer providing financial guidance for both 2025 and 2026.
“There is a rather heavy headwind on the market, Volvo Cars CEO Håkan Samuelsson told CNBC’s “Europe Early Edition” in a Tuesday interview.
“There is a volume drop, and on top of that also price competition, new players in the electric segment, especially those influencing prices generally. And on top of that you have the turbulence now with additional tariffs, so all of that makes it very difficult to predict the future.”
Samuelsson added that the company was focusing on what it can control via the cost action package.
U.S. President Donald Trump imposed 25% tariffs on cars imported to the U.S. earlier this month. The White House has said it also plans to place tariffs on some auto parts such as engines and transmissions, which are set to take effect no later than May 3.
— CNBC’s Jenni Reid contributed to this report.
