Volvo Cars said it expects a turnaround in the second half of 2026 after a difficult second‑quarter performance that was hit by a softening China market and broader geopolitical uncertainty.
Quarterly results show revenue dip, but electric models gain ground
Revenue for the June‑ending quarter came in at 77.7 billion Swedish krona (about $805 million), down from 93.5 billion krona a year earlier. Operating profit slipped to 1.1% of sales, compared with 1.6% in the prior quarter.
The company traced the decline to a “considerable weakening” of demand in China, which affected the whole automotive sector, and to ongoing instability linked to the Middle East conflict. Despite those headwinds, Volvo highlighted growth pockets in the United States and Europe.
In the United States, Volvo recorded back‑to‑back sales increases in May and June, signaling the start of a recovery after several months of decline. European sales held steady, with battery‑electric vehicles (BEVs) boosting their market share from 21% to 25% versus the same period in 2025.
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Among the BEVs, the newly launched EX60 midsize SUV began production in Sweden in April, while the EX30 is now fully assembled at the Ghent, Belgium plant. The flagship EX90 also logged an all‑time high order rate.
CEO says strategic steps provide momentum
Volvo Cars president and CEO Håkan Samuelsson acknowledged the “very challenging external environment” but said progress on strategic actions gives the firm confidence that the back half of the year will improve. He added that the easing of government incentive withdrawals for electrified cars should help lift demand.
The plan hinges on expanding the electric lineup and leveraging a strong brand reputation in safety and sustainability. The firm expects the combination of new model rollouts and a more stable pricing climate in Europe to sustain the upward trend.
Analysts will be watching whether the recovery in the United States can offset the lingering softness in China. The company’s ability to keep BEV market share rising will also be a key metric as competitors intensify their electric offerings.
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The next few months will test Volvo’s resilience.
If the U.S. market continues its modest climb and European buyers keep favoring electric options, the firm could close the year with a modest profit margin improvement. However, any further escalation in geopolitical tensions or a prolonged dip in Chinese demand could stall the rebound.
Volvo’s 2026 outlook aligns with its broader electrification goal of selling 50% of global volume as fully electric by the end of the decade. Recent quarterly filing notes that the EX60 and EX90 are positioned to capture premium‑price segments, while the EX30 targets a more affordable tier.
For now, the company will monitor inventory levels and adjust production schedules as needed, especially in markets where incentive schemes are still in flux. The next earnings report, slated for early 2027, should reveal whether the second‑half expectations materialize.
