Volvo Cars, one of the most exposed European automakers to U.S. tariffs, reported a steep decline in second-quarter operating profit on Thursday, citing persistent industry headwinds. Yet, shares surged up to 10% as the Sweden-based company’s results still exceeded analyst expectations.
The carmaker, owned by China’s Geely Holding, revealed that operating profit excluding one-off items fell to 2.9 billion Swedish kronor ($297.83 million), sharply down from 8 billion kronor during the same period in 2024. Revenue also slipped to 93.5 billion kronor, compared to 101.5 billion kronor last year.
Despite the year-on-year decline, analysts at JPMorgan described the results as better than expected in a research note, boosting market confidence. Volvo Cars’ stock was last seen trading up 8%, though it remains down roughly 20% year-to-date.
Volvo’s earnings came shortly after the company announced strategic plans to add production of its best-selling XC60 SUV to its U.S. facility in Ridgeville, South Carolina. The XC60, a consistent global top-seller, is set to enter production at the plant in late 2026.
This move aligns with a broader shift in strategy driven by steep U.S. tariffs — 27.5% on European-made cars and a hefty 100% on EVs imported from China — prompting automakers to rethink production and product portfolios. Volvo is also pulling sedans and station wagons from its U.S. lineup due to declining consumer interest, according to a Reuters report.
The company also absorbed an 11.4 billion kronor one-time, non-cash impairment charge, further impacting the quarter’s performance.
However, Volvo Cars CEO Håkan Samuelsson reaffirmed the company’s long-term commitment to the U.S. market.
“We will definitely not pull out of the U.S., where we’ve been present for 70 years,” Samuelsson told CNBC’s Europe Early Edition. “What we are doing is ensuring our South Carolina plant becomes the strategic asset it was meant to be. So we have to utilize it more.”
“Second, of course, now with the tariffs, it is very natural to bring in a big-selling volume car. We are bringing in the XC60 SUV,” he added.
Volvo’s strategy reflects broader efforts by global automakers to localize production, navigate geopolitical shifts, and safeguard access to key markets amid rising trade tensions.
With a challenging macro environment and evolving regulatory landscape, Volvo’s move to increase U.S. production could serve as a blueprint for other carmakers caught in the crosshairs of international trade policies.