Volvo Cars shares in record plunge on widening losses, job cuts (updated)

Volvo AB

Today 06:09

Adjusted operating loss 3.7 billion crowns versus year-ago 5.8 billion crown profit
Targets additional 5 billion crowns of indirect spend and variable cost cuts by end next year
Will cut about 2,000 jobs in Sweden, another 500 globally
Adds background, analyst and investor comment in paragraphs 5, 9, 10 and 15
By Marie Mannes
STOCKHOLM, Oct 23 (Reuters) - Volvo Cars VOLCARb.ST shares plunged 24% on Friday after the Swedish carmaker posted a far bigger-than-expected third-quarter operating loss, doubled its cash burn year-on-year and announced 2,500 more job cuts, mostly in its home market Sweden.
The slump, which took the shares to another record low, comes as the firm, majority-owned by China's Geely Holding GEELY.UL, struggles with uneven demand for electric vehicles, mounting tariff pressures and tough market conditions in China.
"The third quarter of 2026 was very disappointing and reflects a year that has become far more challenging than originally anticipated. Our ongoing turnaround plan therefore needs a decisive reinforcement," CEO Hakan Samuelsson said.
He told Reuters that the cuts should be completed by mid-2027, although he did not rule out further measures.  
     
VOLVO BURNS THROUGH CASH IN THIRD QUARTER
The automaker reported an operating loss of 3.7 billion Swedish crowns ($373 million) in the quarter, versus a profit of 5.8 billion crowns a year earlier. Citi analysts said the consensus forecast was for a loss of 724 million crowns.
Volvo's struggles reflect a broader squeeze on European automakers from weak demand, intense competition from Chinese rivals and excess factory capacity that has eroded margins across the industry. Larger rival Volkswagen is planning to cut up to 100,000 jobs and could shutter several plants.     
In the quarter Volvo also burned through some 8.9 billion Swedish crowns, double the cash burn in the same period in 2025.
"If that continues for another two quarters, they might need more capital," said Handelsbanken analyst Hampus Engellau, though he noted the expected ramp-up of the new EX60 electric SUV would help, and that Volvo still had over 30 billion crowns in cash.
The latest measures will affect about 6% of Volvo's workforce through the termination of consultant contracts, natural attrition and targeted exit packages, it said. The cuts come on top of earlier cuts of 3,000 jobs. 
     
INCOMING CEO FACES DEEPENING CRISIS
CEO Samuelsson returned from retirement in 2025 on a two-year contract to turn Volvo around, but despite harsh cost cuts, a regionalisation plan and closer Geely ties, the outlook has only worsened. The carmaker said it needs to trim another 5 billion crowns of costs. 
Former Skoda boss Klaus Zellmer, who will succeed Samuelsson next year, will need to stem the decline of one of Europe's best-known car brands.
"Zellmer... has an even harder job on his hands now than when he was announced one month ago," Bernstein analysts wrote in a note, adding things were unlikely to improve any time soon.
Volvo's EX60, an electric version of the best-selling XC60 and central to Volvo's turnaround, has been hit by heavy delays due to issues with battery assembly. Only around 5,000 units of the planned 40,000 for this year have been built so far, the company said. 
The company scrapped its guidance for full-year sales volume and cash flow this month, saying it would prioritise margins over market share in its key market in China rather than join an intensifying price war with domestic rivals, as its third-quarter revenue fell nearly 50%. 
Mats Ekberg of the Swedish Shareholders' Association, which represents small shareholders in Volvo, said the situation was worrying, but that the carmaker was benefiting from parent Geely's technology and lower costs.
Volvo's gross margin fell to 14.7% in the third quarter from 20.4% a year earlier, it said.
Six of the 13 models Volvo plans to launch by the end of the decade will be designed for China, and Samuelsson said he does not expect any improvement in the group's performance there until they start arriving.
"We should have maybe realised earlier that we need to be more regional in China. Maybe we should have also realised earlier that tariffs would come, so we need to localise more in the US," CEO Samuelsson said.
"So that's a weakness right now which we are addressing."
($1 = 9.9180 Swedish crowns)

 (Reporting by Marie Mannes. Editing by Mark Potter, Elaine Hardcastle and Jan Harvey)
 ((marie.mannes@thomsonreuters.com; +46 8 502 423 82))