Volvo Cars (VOLCAR) Pre-Close Call summary

Executive summary

• Macroeconomic conditions remain soft, with subdued consumer confidence in Europe and the U.S., and ongoing trade policy uncertainty impacting the automotive sector.

• Global premium automotive market is forecasted to decline by 6% in 2025, with sharper contractions in the U.S. and China.

• Inventory adjustments and normalization of wholesale-retail imbalances have been completed, returning to seasonal sales patterns.

Trading performance and revenue trends

• Reported sales for July and August indicate a 12% volume decline so far in Q3.

• Revenues from contract manufacturing were SEK 2 billion in Q1 and SEK 3 billion in Q2 2025.

• EX30 ramp-up in the first half of 2025 boosted prior year comparables; Q3 volumes now align with retail sales.

Profitability and margins

• Gross margin negatively impacted by lower volumes, U.S. tariffs, and a stronger Swedish krona.

• Price increases implemented to mitigate tariff effects, with net actions expected to impact group EBIT by 1%-2% for 2025 at a 25% tariff rate.

• EBIT margin ex-JVs expected to be affected by higher depreciation/amortization due to new model ramp-ups.

• Sale of CO2 credits will contribute to Q3, but at a lower level than Q2, which included both Q1 and Q2.

• Impairment in Q2 will reduce annual amortization by SEK 1 billion, slightly easing future DNA increases.