Volvo Cars (VOLCAR) Pre-close call summary

Executive summary

• Macroeconomic conditions remain challenging globally, with subdued consumer sentiment in key regions and no clear signs of improvement in demand.

• The global premium auto segment is forecasted to contract by 4% in 2026, with sharper declines in the US (5%), Europe (4%), and China (6%).

Trading performance and revenue trends

• Retail sales volumes declined 9% quarter-to-date, with April down 11% and May down 7%, mainly due to a collapse in Chinese ICE segments.

• Wholesale volumes are expected to be on par with retail sales for each quarter this year, barring logistical timing differences.

• BEV sales showed relative resilience compared to ICE models, with a higher mix of BEVs in Q2.

• Orders for the EX60 are coming in faster than expected and at better margins, with a full-year volume forecast of 40,000 units unchanged.

• FX continues as a headwind, though less severe than in Q1.

Profitability and margins

• Gross margin is pressured by elevated discount levels, higher freight costs, and a weaker car line mix.

• Q2 EBIT margin is expected to be negatively impacted by increased depreciation and amortization, higher raw material costs, and continued discounting.

• EBIT margin trends are expected to be weaker in Q2 versus Q1, with several negative factors outweighing positive self-help measures.

• Depreciation and amortisation are increasing with new product launches, including the EX60.