Volvo is facing a rough start to 2025, with the Swedish automaker reporting disappointing figures for the first quarter. The company, now under Chinese ownership, saw a significant dip in its profits and sales, causing concern over its outlook.
The vehicle manufacturer revealed that net profit dropped to 9.89 billion Swedish krona (€0.91 billion), a sharp decline from the 14.08 billion krona (€1.29 billion) posted during the same period last year. Sales also fell by 7%, totaling 121.8 billion krona (€11.15 billion). Heavy lorry deliveries dropped 12%, though the company noted a 13% increase in new orders, mainly driven by stronger demand in Europe.
Despite these setbacks, Volvo’s CEO, Martin Lundstedt, remains optimistic about the future, asserting that the company’s global reach will help it weather the storm. The company lowered its expectations for the North American market, revising its forecast for heavy lorry sales to 275,000 units for the year, down from an earlier estimate of 300,000. Meanwhile, Volvo’s outlook for Europe remains steady at 290,000 units, although there’s considerable uncertainty in the region as well.
Lundstedt emphasized that although tariff issues and emissions regulations have caused some delays, Volvo’s long-term strategy remains strong. “We’re not panicking,” he told Sweden’s national news agency, pointing out that logistics and infrastructure will continue to be in demand in the years ahead.
A key factor contributing to the slowdown in North America has been market hesitancy, particularly due to ongoing tariff uncertainty and new exhaust emission laws set to take effect in 2027. The company no longer expects significant disruptions from these regulations, but has downgraded its forecasts for North America and Brazil in 2025.
To cope with the shifting landscape, Volvo has announced staff cuts in the US, with up to 800 jobs expected to be slashed over the next three months. In contrast, the company is hiring more personnel in Sweden, where demand for vehicles in other markets is on the rise.
While shares dropped by about 2% when the market opened on April 23, analysts are noticing a divergence between Volvo’s markets in the US and Europe. European demand for lorries grew by 25% in the first quarter, whereas US orders lagged behind deliveries.
The company’s tough first quarter raises questions about the future trajectory of Volvo, but with strategic adjustments in place, it’s hoping to turn things around as the year progresses.
