Volvo Cars is on track for its worst trading day ever as fourth-quarter profit slumps

Shares in Sweden’s Volvo Cars fell more than 28% on Thursday, putting the company on track for its worst trading day ever.

The automaker, owned by China’s Geely Holding, posted Significant decline in fourth-quarter operating profit, citing US tariffs, negative currency impact and weak demand.

Volvo Cars said fourth-quarter operating income, excluding items affecting comparability, was 1.8 billion Swedish krona ($200.46 million), a 68% drop from the same period a year ago.

“We have a very challenging market, especially in China, with very tough competition. All our European colleagues have the same problem,” Volvo Cars CEO Håkan Samuelsson told CNBC “Europe Early Edition“Thursday.

He added that the shutdown of EV incentives in the US and China is also contributing to a “very challenging external environment”.

“But internally we’ve done a very good job reducing our costs and getting positive cash flow, so I’d highlight that as the most important positive we’ve achieved in the year,” he added.

Shares of Volvo Cars were last seen down 28.2%. A single-session drop of more than 11.2% would mark the firm’s worst trading day ever.

Analysts at UBS said that based on Volvo Cars’ profit decline, they expect a 10%-15% downgrade in full-year consensus earnings before interest and tax (EBIT) in the last three months of 2025, “likely with an underlying EBIT margin close to 0%”.

US and EU Agreed on a framework trade agreement In July last year, the Trump administration imposed a blanket tariff of 15% on many EU goods, a significant drop from Trump’s threat of 30% and almost halving the tariff rate on Europe’s auto sector from 27.5%.

Industry groups that had tentatively welcomed the trade deal at the time expressed serious concerns about the costs associated with the new tariffs.

Volvo Cars is considered one of the European carmakers most exposed to US tariffs.

Looking ahead, Volvo Cars said it will ramp up deliveries of its new and fully electric EX60 mid-size SUV later in the year.

However, it warned that 2026 is likely to be another challenging year, with continued cost pressures, tariff effects, regulatory uncertainty and soft consumer sentiment likely to weigh on the industry.