Volvo layoff: Carmaker to cut 2,500 jobs globally as Q3 loss widens, to affect about 6% of workforce
Volvo Cars will cut about 2,000 jobs in Sweden and another 500 globally, as the Swedish automaker posted a far bigger-than-expected third-quarter operating loss and doubled its cash burn year-on-year, Reuters reported. Shares of the company plunged 24% on Friday to a record low.
The automaker, majority-owned by China's Geely Holding, is struggling with uneven demand for electric vehicles, mounting tariff pressures, and tough market conditions in China.
The latest round of layoffs will affect about 6% of Volvo's workforce through the termination of consultant contracts, natural attrition, and targeted exit packages. The reductions, which follow 3,000 earlier job cuts, are expected to be completed by mid-2027.
“The third quarter of 2026 was very disappointing and reflects a year that has become far more challenging than originally anticipated. Our ongoing turnaround plan therefore needs a decisive reinforcement,” CEO Hakan Samuelsson announced on Friday
He told Reuters that the cuts should be completed by mid-2027, although he did not rule out further measures.
Volvo reported a third-quarter operating loss of 3.7 billion Swedish crowns ($373 million), a sharp reversal from a profit of 5.8 billion crowns a year earlier. The loss significantly missed consensus forecasts of 724 million crowns, according to Citi analysts.
The company also burned through 8.9 billion Swedish crowns in the quarter, double the cash burn recorded in the same period in 2025. Third-quarter revenue fell nearly 50%, and gross margins dropped to 14.7% from 20.4% a year earlier. The carmaker stated it now needs to trim another 5 billion crowns in costs.
“If that continues for another two quarters, they might need more capital,” Handelsbanken analyst Hampus Engellau told Reuters, though he noted that the company still holds over 30 billion crowns in cash and will benefit from the upcoming ramp-up of its new EX60 electric SUV.
Volvo's struggles mirror a broader squeeze on European automakers dealing with weak demand, excess factory capacity, and intense competition from Chinese rivals. Larger rival Volkswagen is currently planning to cut up to 100,000 jobs and could shutter several plants.
Central to Volvo's turnaround is the EX60, an electric version of its best-selling XC60. However, the model has faced heavy delays due to battery assembly issues. The company disclosed that only around 5,000 units of the planned 40,000 for this year have been built so far.
Consequently, Volvo scrapped its guidance for full-year sales volume and cash flow this month. In China, its key market, the company is prioritising margins over market share rather than engaging in an intensifying price war with domestic rivals. Six of the 13 models Volvo plans to launch by the end of the decade will be designed specifically for China, with Samuelsson noting he does not expect performance improvements there until those models arrive.
Mats Ekberg of the Swedish Shareholders' Association, representing small shareholders, called the situation worrying but acknowledged the carmaker benefits from Geely's technology and lower costs.
Samuelsson, who returned from retirement in 2025 on a two-year contract to stabilise the company, admitted strategic missteps.
“We should have maybe realised earlier that we need to be more regional in China. Maybe we should have also realised earlier that tariffs would come, so we need to localise more in the US," he said.
Former Skoda boss Klaus Zellmer is set to succeed Samuelsson next year and will inherit the deepening crisis. Bernstein analysts wrote in a note that Zellmer “has an even harder job on his hands now than when he was announced one month ago,” adding that near-term improvements are unlikely.
(With Reuters inputs)
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