171,500 vehicles — that's how many Volvo Cars sold in the second quarter of 2026. That's 6% less than a year ago. But the more telling figure hidden behind this number is: sales in China fell by 35%.
The Report the Market Didn't Expect
On Friday, July 17, Volvo Cars published its financial report for April–June. Operating profit came in at 826 million Swedish kronor (approximately 75 million euros) — almost half the analysts' forecast of 1.3 billion kronor. Revenue fell from 93.5 to 77.7 billion kronor — down 17% year-over-year. The reasons cited by the company: lower wholesale volumes, unfavorable product mix, pricing pressure, and currency headwinds.
The market's reaction was immediate: Volvo Cars' stock fell 8% in the opening hours of trading.
"The Hardest Region in the Entire Auto Industry"
The key problem is China, where Volvo faced price wars among local manufacturers. The company publicly refused to play by their rules.
"The situation is very difficult right now: volumes are falling, and the pricing pressure is immense. Profitability in China is far from satisfactory."
Håkan Samuelsson, CEO of Volvo Cars, Reuters
Commercial Director Erik Severin clarified the company's position: "China is now the toughest region in the entire automotive industry. But we will not engage in discount wars."
Meanwhile, the US is also applying pressure: Trump's tariffs on imported cars from the EU, though reduced from 27.5% to 15%, increased the price of, for example, the Volvo XC60 by approximately 4,000 dollars — and consumers responded by refusing to buy. The end of electric vehicle subsidies added to the lack of optimism.
What Analysts Say
Handelsbanken analyst Hampus Engelo noted that incentivized sales and price cuts hit the company's margins harder than the market expected. JPMorgan analysts confirmed: both profit and revenue — both metrics fell short of consensus forecasts.
Rating agency S&P previously changed its outlook on Volvo Cars to "negative," citing "increasing marginalization of the company in the Chinese market" and significant dependence on American imports. According to S&P, China accounted for 20% of Volvo's sales in 2024, and the US for 16%. Both markets are now under pressure.
Notably: BMW reported a month earlier that sales in China fell 30% and issued a profit warning. Volvo is not an exception, but part of a systemic crisis in the premium segment of the Chinese market.
Abandoning Targets
The company officially abandoned its plans for sales growth in 2026 — although it expects stronger results in the second half of the year thanks to the launch of new models. In parallel, Volvo Cars is cutting approximately 3,000 predominantly office employees — part of a broader cost reduction program.
The operating profit margin for the quarter was only 1.1% compared to 1.6% in the first quarter. Operating and investment cash flow — minus 5.24 billion kronor, whereas a year ago it was plus 4.18 billion.
If the new flagship models that Samuelsson is banking on don't reverse the dynamic in China by year-end — investors will have to revise their expectations for the entire business of the company controlled by Chinese Geely.
