Volvo Cars reported mixed financial results for the fourth quarter of 2025 as the Swedish automaker navigated a challenging global automotive market while making further progress in its transition to electrified vehicles. The company said revenue and profitability were down compared with the year-ago period, highlighting ongoing headwinds from pricing pressures and softer demand.
For the three months ending Dec. 31, Volvo Cars recorded revenue of SEK 94.4 billion, a decline from SEK 112.1 billion in the same quarter of 2024, and posted operating income (EBIT) of SEK 1.9 billion, with a 2.0 per cent margin — lower than the 3.4 per cent margin reported a year earlier. Free cash flow for the quarter was a positive SEK 8.8 billion, supported by the company’s cost-reduction and cash-action plan.
Despite the weaker financial performance, electrified vehicles continued to gain ground within the company’s sales mix. Fully electric models made up about 24 per cent of Q4 sales, up from 21 per cent a year earlier, while total electrified vehicles, including plug-in hybrids, accounted for roughly 49 per cent of all deliveries. Volvo said the figures underscored customer interest in its electric portfolio amid broader industry electrification trends.
Volvo also cited a number of external challenges that weighed on results, including import tariffs between the European Union and the United States, foreign exchange headwinds from a stronger Swedish krona and the phased-out U.S. electric vehicle incentives. The company reported particularly strong demand for the XC70 long-range plug-in hybrid SUV in China, which helped it expand its premium market share in the region.
Chief Executive Officer Håkan Samuelsson said the company’s cost and cash action plan helped stabilize operations in a turbulent environment and laid a foundation for future growth. He reiterated that Volvo’s strategy remains focused on returning to volume growth and improved profitability while expanding its electrified vehicle lineup in 2026.
Looking ahead, Volvo said it expects continued market uncertainty in the year ahead, including pricing pressure and regulatory changes. The company indicated that 2026 will likely be another transitional year as it ramps up deliveries of upcoming models such as the fully electric EX60 SUV, while aiming for stronger cash generation and an operating profit margin above 8 per cent over the longer term.
