Volvo Cars Swings to Q2 Profit Despite 17% Revenue Drop and China Sales Plunge

Volvo Cars on Friday announced a return to profitability for the second quarter, posting an operating profit of 826 million Swedish crowns (SEK). However, the automaker's consolidated revenue and retail sales both declined, weighed down by a significant slump in the Chinese market.

A Closer Look at the Financials

The second-quarter profit marks a sharp reversal from the 9.96 billion SEK operating loss reported in the same period a year earlier. Volvo Cars noted that the prior-year result was heavily impacted by one-time expenses that did not recur, including an 11.4 billion SEK impairment charge related to its EX90 and ES90 platform and 1.4 billion SEK in restructuring costs.

Despite the improved bottom line, consolidated revenue fell 17% year-over-year to 77.67 billion SEK. The company attributed the decline to several factors:

• Lower wholesale vehicle volumes
• An unfavorable sales mix and pricing environment
• The absence of a 3.3 billion SEK one-time sale of subscription car portfolios that occurred in Q2 2025
• Unfavorable foreign exchange rates

Net income attributable to parent company owners was 1.26 billion SEK, or 0.42 SEK per share, compared with a loss of 7.51 billion SEK, or 2.53 SEK per share, a year ago.

Sales Weaken on China Headwinds

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Global retail sales decreased by 6% to 171,500 cars in the second quarter. This drop was primarily driven by performance in Greater China, where the company's retail sales plummeted by 35% compared with the second quarter of 2025. This performance underscores what the company described as a "challenging China."

In response to the market conditions, CEO Håkan Samuelsson stated, "In this very challenging external environment, we made progress on our strategic actions." The company recently began production of its new EX60 electric SUV at its Torslanda plant.

Outlook and Cash Flow

Looking ahead, Volvo Cars said it expects "significantly stronger sales in the second half of the year compared with the first half," citing anticipated growth in Europe and a continued recovery in the United States. The company's operating and investing cash flow was negative 5.24 billion SEK, a shift from a positive 4.18 billion SEK a year ago, which it said was largely due to a planned inventory build-up for the new EX60 and other investments.

For the full year, the automaker projects it will end with a free cash flow that is "approximately at break even," anticipating a strong positive flow in the latter part of the second half.