Volvo Cars (VOLCAR) Pre-close call summary

Market environment and competitive dynamics

• Global macro environment remains challenging with low visibility and subdued consumer sentiment across key regions.

• Euro area consumer confidence improved slightly but remains below long-term averages; U.S. sentiment weakened further in August.

• China faces uneven macro conditions, fragile household consumption, and high competitive pressure in the auto market, with sharp year-on-year declines in passenger vehicle sales.

• Chinese manufacturers are expanding internationally, increasing competition in overseas markets, including Europe.

• Global premium segment forecast to contract by 5% in 2026, with sharper declines in China (14%) and the U.S. (6%).

Trading performance and revenue trends

• Retail sales volumes declined 13% quarter-to-date, with July down 8% and August down 19%.

• Discount levels remain elevated, especially in China, due to low demand.

• FX headwinds persist, mainly from Turkish TRY and Chinese CNY.

Profitability and margins

• Gross margin negatively impacted by high discounts, elevated freight costs driven by crude oil prices, and FX headwinds.

• Lower volumes and higher depreciations further pressure gross margins compared to Q3 2025.

• EBIT margin affected by increased depreciation/amortization from new product launches and lower capitalization rates.

• Margin trends in Q3 expected to mirror Q2, with negative effects from volume, discounts, and car line mix due to higher BEV share.

• Q3 is expected to be more affected by delayed higher raw material costs than Q1 and Q2.