Volvo Cars shares plunge 19.5% on fourth-quarter profit drop as tariffs and weak demand bite

Volvo's stock price plummeted nearly 20% this morning, marking its steepest single-day decline ever.

The Swedish carmaker, majority-owned by China's Geely, suffered a major blow to its fourth-quarter earnings due to a "triple threat" of heavy trade tariffs, unfavorable currency fluctuations, and a slump in consumer demand.

The automotive industry is currently facing a huge crisis globally. Hence, the car industry is currently caught in the crosshairs of a global trade war, specifically citing the devastating impact of 25% U.S. "reciprocal" tariffs on Chinese- and European-made vehicles, which have forced the company to discontinue half of its American model lineup.

Indeed, Volvo Cars attributed its recent financial struggles to a combination of cross-border trade barriers and unfavorable exchange rates, noting that new import taxes between the EU and US, alongside a surging Swedish krona, significantly eroded its fourth-quarter earnings.

This financial blow was further exacerbated by a strengthening Swedish krona and a sharp cooling of consumer demand, as the expiration of EV tax credits and high interest rates have priced many middle-class buyers out of the market. Despite these headwinds, CEO Jim Rowan has doubled down on a 2026 survival strategy focused on "regionalizing" production to bypass trade barriers and aggressively cutting costs to navigate what industry analysts are calling the toughest automotive climate in a generation.

Benedetta Zimone