STOCKHOLM (Reuters) -Volvo Cars said on Thursday that it was targeting a long-term operating profit margin of over 8% in a strategy overhaul, deepening its cooperation with majority owner Geely to cut costs and enable a strong positive cash flow.
The Swedish automaker last year scrapped its target of going all electric by 2030, saying it would continue to offer some hybrid models in its lineup amid a slowdown in demand for fully electric vehicles.
With most of its U.S.-bound cars made in Europe, Volvo has been heavily impacted by President Donald Trump’s import tariffs, but the company recently took steps to move production of some hybrids to the United States in coming years.
DEEPER COOPERATION WITH CHINA’S GEELY
Volvo Cars in early 2025 brought back former CEO Hakan Samuelsson, a close confidant of Geely-owner Li Shufu, for a two-year term to revive a record-low share price, quickly launching cost savings and cutting 3,000 white-collar jobs.
This also included pulling the group’s then-outlook such as delivering a core operating profit margin of 7-8% and generating a strong positive free cash flow in 2026, the company said at the time.
Volvo Cars said on Thursday it aims to reduce variable costs by working more closely with Geely, a Chinese conglomerate, on hardware sourcing and expects to cut indirect costs by using the same software across a range of models, including hybrids.
“The company is finalising major investments in new technology and infrastructure, allowing it to reduce investments to an affordable level,” Volvo Cars said in a statement.
Samuelsson on October 23 presented stronger-than-expected third-quarter profits, sending Volvo Cars’ share price up 40%.
(Reporting by Marie Mannes, editing by Terje Solsvik and Louise Heavens)
