Volvo Cars Q4 2025: turnaround plan on track, but challenging external environment
Volvo Cars' financial report for the fourth quarter and full year 2025.
- Q4 revenue was SEK 94.4 bn (SEK 112.1 bn in Q4 2024)
- Q4 operating income was SEK 1.9 bn (SEK 3.9 bn in Q4 2024)
- Q4 operating income (excl. items affecting comparability) was SEK 1.8 bn (SEK 5.6 bn in Q4 2024)
- Q4 EBIT margin was 2.0 per cent (3.4 per cent in Q4 2024)
- Q4 EBIT margin (excl. items affecting comparability) was 1.9 per cent (5.0 per cent in Q4 2024)
- Q4 basic earnings per share were SEK 0.43 (SEK 0.84 in Q4 2024)
- Q4 fully electric car sales share at 24 per cent (21 per cent in Q4 2024)
- Q4 electrified car sales share at 49 per cent (47 per cent in Q4 2024)
- Q4 free cash flow of SEK 8.8 billion (SEK 13.6 billion in Q4 2024)
Volvo Cars today reports a group operating income (EBIT) of SEK 1.9 billion and an EBIT margin of 2.0 per cent for the fourth quarter of 2025. While the results reflect a challenging external environment, the company realised a positive free cash flow of SEK 8.8 billion for the quarter, thanks to the successful execution of its SEK 18 billion cost and cash action plan.
For the full year 2025, Volvo Cars recorded an adjusted operating income of SEK 12.5 billion, which translates into an adjusted EBIT margin of 3.5 per cent. Full-year free cash flow came in at SEK 2.4 billion, despite a challenging external environment.
The company’s fourth quarter performance was affected by several external factors, such as EU-US import tariffs and the negative currency effect of a stronger Swedish krona. On top of that, revenues were affected by weak demand putting pressure on pricing and the removal of EV incentives in the US, which negatively impacted sales in the quarter.
Fully electric sales grew in three consecutive months through December, retail orders are growing, and Volvo Cars saw a solid performance in China thanks to encouraging demand for the XC70 long-range plug-in hybrid SUV. The company increased its premium market share in the highly competitive China market in 2025.
Volvo Cars continued to see positive effects from its SEK 18 billion cost and cash action plan. The company established a new and lower cost base, navigated the turbulent external environment and put itself back on a path to profitable growth.
“I am very pleased that we successfully executed our cost and cash plan,” says Håkan Samuelsson, chief executive. “Our actions in 2025 have set us on a path to return to volume growth and improved cash flows.”
More details about Volvo Cars’ performance can be found in the fourth quarter and full-year 2025 financial report.
Looking ahead
In 2026, Volvo Cars will focus on executing its strategy. At its Strategic Update in November, the company laid out its long-term financial and strategic direction which will help it return to profitable growth. It is structurally building a company with the aim of achieving long-term EBIT margins of over 8 per cent, strong positive cash flows and growth through electrified products.
This starts with the new and fully electric EX60 mid-size SUV, revealed two weeks ago. Initial customer response to the EX60 has been overwhelmingly positive, and the company is encouraged by the strong order numbers so far.
Deliveries of the EX60 will ramp up during the second half of 2026. Another building block for growth is the XC70, which will enter its first full year of production and sales. The improved model year 2026 EX90 will reach more customers, and the EX30 will complete its first full year of production in Ghent.
Nevertheless, 2026 will be challenging for the industry with continued pricing pressure from a competitive market, tariff effects, regulatory uncertainty and softer consumer sentiment. The overall premium market is expected to shrink.
In the first half of 2026, Volvo Cars will also have negative cash effects from a temporary inventory build-up of XC90 and XC60 cars in the Torslanda plant, to meet full year demand for these still very popular models and compensate for the start of production of the EX60.
In the short term, the company will continue to become more efficient and lower its cost base, which will help to mitigate a persistently tough external environment. Volvo Cars will further reduce variable and indirect costs throughout 2026. Its investment pace will further move towards affordable levels.
For 2026, Volvo Cars aims to come back to volume growth on a year-on-year basis for the full year and increase cash generation, with full-year free cash flows clearly better than what it achieved in 2025.
This disclosure contains information that Volvo Car AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 05-02-2026 07:00 CET.
