Volvo Cars reported a major earnings surprise on Thursday, beating third-quarter profit forecasts despite ongoing U.S. tariffs and fierce market competition. Aggressive cost-cutting efforts delivered results faster than expected, pushing the company’s shares up more than 25% — their best performance in over a year.
The Swedish automaker, majority-owned by China’s Geely Holding, posted an operating profit of 5.9 billion Swedish crowns ($627 million) for the July–September period, far above analyst expectations of 1.6 billion crowns, according to Bernstein.
This strong profit came even as sales fell 7%, with electric vehicles accounting for less than a quarter of total deliveries. Volvo’s gross margin rose sharply to 24.4%, up from 17.7% in the previous quarter, reflecting the impact of supply-chain efficiencies, model upgrades, and cost reductions.
CEO Hakan Samuelsson, who returned to lead the company earlier this year, credited the turnaround to internal reforms rather than external market help. He pointed to the facelifted XC60, tighter cost management, and better collaboration with Geely’s supply chain. “This is delivering faster than we thought and faster than we planned,” Samuelsson said.
Since returning, Samuelsson has restructured leadership, cut 3,000 jobs, and shifted focus from market share growth to cash flow and profitability. Analysts at Handelsbanken noted the improvement stems directly from the new management’s execution rather than favorable market trends.
Volvo Cars, one of the European automakers most exposed to U.S. import tariffs, has begun moving hybrid production to the U.S. to reduce costs. Recent trade talks between the U.S. and the EU led to a tariff cut on European cars from 27.5% to 15%, applied retroactively from August 1.
Samuelsson said the new tariff agreement brings “much-needed clarity,” though challenges such as price competition and shifting consumer demand remain.
At the same time, French rival Renault also posted results above expectations, signaling resilience across parts of the European auto sector.
