Volvo Car AB reported a 68% decline in fourth-quarter operating income excluding items affecting comparability, falling to SEK 1.8 billion from SEK 5.6 billion in the prior-year quarter. Group revenue slipped to SEK 94.4 billion from SEK 112.1 billion a year earlier, while the EBIT margin narrowed to 1.9% (5.0% ex-items) versus 5.0%. Basic earnings per share were SEK 0.43, down from SEK 0.84, and free cash flow contracted to SEK 8.8 billion from SEK 13.6 billion in Q4 2024.

Management attributed the profit contraction to EU–U.S. import tariffs, a stronger Swedish krona and soft consumer demand that pressured pricing. The removal of U.S. electric-vehicle incentives weighed on sales volumes, which fell 7% to 177,830 units in the November–January period. These headwinds offset growth in electrified vehicle penetration, with full-electric sales rising to 24% of volume (21% in Q4 2024) and overall electrified mix reaching 49%.

Volvo Cars has executed SEK 18 billion of cost and cash measures, establishing a lower cost base that delivered positive free cash flow despite the challenging environment. For full-year 2025 adjusted operating income reached SEK 12.5 billion (3.5% margin) and free cash flow was SEK 2.4 billion. The company plans additional savings of SEK 556 million in 2026, targeting further reductions in variable and indirect costs to support profitability.

CEO Håkan Samuelsson emphasized that long-term growth depends on a fully electrified lineup. Deliveries of the new EX60 mid-size electric SUV will ramp up in H2 2026, while the XC70 plug-in hybrid and updated EX90 expand the electrified portfolio. Despite an expected contraction in the premium market, Volvo aims to return to volume growth and generate free cash flow above last year’s SEK 2.4 billion by focusing on 8%+ EBIT margins and strong positive cash conversion.