Volvo Cars shares plunge 30% amid China, U.S. slump and fresh job cuts

Key points

• Volvo Cars plans to cut 2,500 jobs globally, including 2,000 in Sweden, to save 5 billion Swedish Kronor.
• The automaker posted a third-quarter operating loss of 5.6 billion Swedish Kronor, down from a 6.4 billion profit in the previous period.
• Volvo Cars shares fell 30.7% after the European market opened following the earnings report.

Volvo Cars said Friday it will cut 2,500 jobs after a sharp decline in its Chinese market weighed on third-quarter earnings. The Swedish automaker reported an operating loss of 5.6 billion Swedish Kronor ($563.7 million) in the third quarter, down from an operating profit of 6.4 billion Swedish Kronor in the previous period.

Volvo Cars shares were last down 30.7% after the European market opened.

What drove the loss

The company cited a deteriorating environment led by "tougher" market conditions in China and the U.S., which "negatively affected free cash flow." Volvo Cars said its revenues in China fell almost 50% year-on-year as premium brands faced "hypercompetition" from new Chinese rivals, which also put severe pressure on pricing.

In the U.S., the company cited negative effects from tariffs and fewer customer incentives to buy electric cars, putting pressure on profit margins.

negatively affected free cash flow

— Volvo Cars

Job cuts and cost savings

Volvo Cars said it is looking to cut 5 billion Swedish Kronor in costs by eliminating 2,500 jobs globally, with 2,000 of those jobs based in Sweden.