Volvo Cars shares soar 25% after profit beats expectations

Volvo Cars’ shares jumped more than 25% after the company reported a much stronger-than-expected third-quarter profit, defying tariff pressures and intense market competition.

The Sweden-based automaker, majority-owned by China’s Geely Holding, said operating profit before one-off items reached 5.9 billion Swedish crowns ($627 million) for the July–September period – far above analysts’ consensus of 1.6 billion crowns, according to Bernstein.

This strong result came despite a 7% drop in sales, with fully electric vehicles accounting for less than a quarter of total deliveries. The gross margin rose to 24.4% from 17.7% in the previous quarter, driven by an updated XC60 model, joint procurement savings with Geely, and large-scale cost reductions.

Chief Executive Håkan Samuelsson, who returned to lead Volvo earlier this year, said the cost-cutting measures were taking effect “faster than we thought.” Since his return, Samuelsson has replaced the chief financial officer, announced 3,000 job cuts, withdrawn previous earnings guidance, and slowed investment programs.

According to Handelsbanken analyst Hampus Engellau, the improved performance reflects the new management team’s shift in focus “from market share and growth to profitability and cash flow.”

Another boost came from a reduction in U.S. import tariffs on European cars. Following recent trade talks between Washington and Brussels, the tariff was retroactively lowered from 27.5% to 15% as of August 1, easing risks for Volvo, which exports most of its U.S.-bound vehicles from Europe.