No Western group is currently able to cope with the challenges of the automotive market - except maybe Ferrari, which operates in a segment of its own. Volkswagen, Stellantis, Tesla, BMW, and others are all in the mire as is Sweden's Volvo. Its Q1 sales fell 12% y-o-y, while its profits and cash flow are in free fall.
The company, which is majority-owned by the Chinese group Geely, has suffered in all areas. Car sales volumes are down sharply, prices are falling, and exchange rates are unfavorable. Major uncertainties surrounding customs duties are only serving to undermine an already sluggish economy. The US accounts for 17.5% of sales. As a result, visibility is virtually zero and the outlook for this year and next is bleak.
Volvo Cars wants to focus on cutting costs: they target SEK18bn in savings (US$1.65bn). To achieve this, the group will lay off employees, reduce investments, and restructure its US operations. Management says that effects will be felt in 2026.
The automotive industry is indeed going through tough times. No improvements are yet in sight, and as we know, financiers hate not being able to predict the future. The coming weeks are likely to be very lean for manufacturers.
