Volvo posts 5.6 billion kronor operating loss as revenue falls to 66.9 billion
Key Facts
Volvo Cars reported revenue of 66.9 billion Swedish kronor in the third quarter of 2026, down from 86.4 billion in the same period last year, and swung to an operating loss of 5.6 billion kronor from operating income of 6.4 billion. It also posted a basic loss per share of 1.63 kronor, compared with earnings of 1.75 kronor a year earlier. Chief Executive Håkan Samuelsson said the third quarter was "very disappointing" and that the year had become more difficult than initially expected. The drop in revenue and swing to an operating loss put the company’s results under acute pressure, alongside weak sales in China and the Americas. Volvo’s shares fell more than 25% at around 10:00 GMT on October 23, according to Agence France-Presse coverage.
The reported operating margin fell to negative 8.4% in the quarter, compared with 7.4% a year earlier. Excluding the company’s share of income from joint ventures and associates and items affecting comparability, the operating margin was negative 5.6%, versus 6.7% in the third quarter of 2025. Free cash flow was negative 8.9 billion kronor, widening from a deficit of 4.3 billion a year earlier. Volvo’s revenue in China also fell by nearly 50% year over year, alongside a decline in deliveries in the region. This weakness formed part of the backdrop to the company’s October 2 warning that a deteriorating Chinese market and a slow recovery in the United States would affect quarterly earnings and cash flow.
In Greater China, deliveries fell 40.6% to 20,284 cars in the third quarter. Volvo said sales were affected by intensifying competition and pricing pressure from local companies, as well as a weak macroeconomic environment. The company had warned on October 2 that the deteriorating Chinese market would have a significant negative effect on its underlying earnings and cash flow for the quarter. In its quarterly sales statement, Chief Commercial Officer Erik Severinson said "the market decline in China has shown no signs of abating." China accounted for the largest regional decline among the regions for which the company reported figures, with revenue there falling by nearly half.
In the Americas, sales fell 14% to 30,777 cars, while sales in Europe and the rest of the world rose 2% to 90,548 cars. The company linked the decline in the Americas to weak consumer confidence, stronger competition in the sport utility vehicle segment and a high comparison base. It added that the recovery in demand for fully electric and plug-in hybrid cars had been slow. In the same statement, Severinson said the recovery in the U.S. premium car segment remained below earlier expectations. The figures show contrasting sales growth in Europe and the rest of the world and declines in the other two regions, without the company extending its explanation of the Americas performance to the U.S. market alone.
The quarter’s result was also affected by a revaluation of CAFE credit balances, which Volvo said stemmed from legislative changes in the United States and had a negative impact of 1.1 billion kronor. The company also cited adverse raw-material price developments and a negative impact of 0.9 billion kronor from recognizing in the third quarter losses incurred by Polestar in the second quarter of 2026. In contrast, fully electric cars’ share of Volvo sales rose to 32%, from 22% a year earlier. Electrified cars, including plug-in hybrids, accounted for 53% of sales, compared with 46% in the same period. The expanding share of electrified models coincided with lower revenue, margins and cash flow in a quarter the company said was adversely affected by market pressures.
Volvo said on October 2 that it would not meet its previous full-year 2026 guidance for sales volumes and cash flow, citing increasingly difficult market conditions and a deteriorating near-term outlook. It pointed then to an expected significant negative impact on third-quarter underlying earnings and cash flow. It did not provide replacement short-term guidance in that disclosure. Samuelsson described the results as disappointing and said the transformation plan needed a decisive boost. Amid the company’s pressures, Reuters reported that gross margin fell to 14.7% in the third quarter from 20.4% a year earlier, and that the stock reached a record low during the week results were announced.
On its product plans, Volvo is targeting the launch of 13 new electric cars designed for regional markets through the end of 2030. In a strategy update on September 17, it said it aimed to build a company capable of achieving an operating margin above 8% and strong positive cash flow. The company said three cars would be unveiled in 2027. Highlighting the challenges of ramping up production, it said the EX60 had received more than 50,000 orders as of October 23, but new production technologies had made it take longer than planned to increase manufacturing rates. It expected the model’s production volumes to continue rising gradually. Volvo scheduled the release of its fourth-quarter 2026 report for February 4, 2027, at 07:00 Central European Time.