Volvo Cars shares in record plunge on widening losses, job cuts (updated)
UPDATE 5-Volvo Cars shares in record plunge on widening losses, job cuts Adds background in paragraph 5, analyst in paragraph 9, CEO quote and background on China paragraphs 13-15
By Marie Mannes
STOCKHOLM, Oct 23 (Reuters) - Volvo Cars VOLCARb.ST shares fell almost 30% on Friday after the Swedish carmaker posted a far bigger-than-expected third-quarter operating loss and said it would cut a further 2,500 jobs, mostly in its home market Sweden.
The slump, which takes the shares deeper into record lows, 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.
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.
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.
The latest measures will affect about 6% of Volvo's workforce, including around 2,000 jobs in Sweden, through the termination of consultant contracts, natural attrition and targeted exit packages, it said. The cuts come in addition to 3,000 job reductions previously announced.
Samuelsson told Reuters that the cuts should be completed by mid-2027, although he did not rule out further measures.
INCOMING CEO FACES DEEPENING CRISIS
Former Skoda boss Klaus Zellmer, who will succeed Samuelsson next year, will need to stem the decline of one of Europe's most well-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, saying they struggled to see things improving 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%.
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 does not see any improvement in the group's performance there until they start arriving, he said.
"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," Samuelsson said.
"So that's a weakness right now which we are addressing."
($1 = 9.9180 Swedish crowns)
(Reporting by Marie Mannes. Editing by Terje Solsvik, Adam Jourdan, Mark Potter, Elaine Hardcastle)
((marie.mannes@thomsonreuters.com; +46 8 502 423 82))