The announcement on Friday followed a difficult third quarter in which the company, majority-owned by China's Geely Holding, recorded an adjusted operating loss of 3.7 billion Swedish crowns ($373 million), compared with a profit of 5.8 billion crowns in the corresponding period last year.
The latest job reductions form part of a broader restructuring programme aimed at restoring profitability as the company grapples with rising costs, slowing electric vehicle (EV) demand and deteriorating market conditions. Volvo Cars said it would pursue an additional 5 billion crowns in savings from indirect spending and variable costs, with the reductions expected to be realised by the end of next year.
According to the company, the planned workforce cuts will be implemented through the termination of consultancy contracts, natural attrition and the offer of “targeted exit packages” to employees. The measures are expected to affect workers across its global operations, with Sweden accounting for the majority of the job losses.
Chief Executive Officer Hakan Samuelsson acknowledged the severity of the company's latest performance, describing the quarter as a setback for its ongoing recovery efforts.
“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,” Samuelsson said.
The latest financial results highlight the difficulties facing Volvo Cars as the global automotive industry navigates an increasingly competitive environment. The company has been contending with cooling demand for electric vehicles, challenging trading conditions in China and the financial burden of tariffs and substantial development expenditure.
China, a major market for the automaker, has become a particular source of concern. Revenue in the country fell by almost 50 per cent in the third quarter, reflecting the pressure on Volvo Cars as domestic manufacturers compete aggressively on pricing, technology and product offerings.
The company has also faced headwinds in the United States, where tariffs and subdued consumer demand have weighed on sales. These pressures have compounded the effects of discounting and elevated production and development costs, making it more difficult for the automaker to protect its margins.
Earlier this month, Volvo Cars abandoned its full-year guidance for sales volumes and cash flow, citing an increasingly challenging market environment and a deteriorating near-term outlook. The decision underscored the uncertainty surrounding its financial performance for the remainder of the year.
The latest redundancies come on top of 3,000 job cuts announced shortly after Samuelsson returned as chief executive in 2025. At the time, the company introduced an 18 billion-crown savings plan, tightened spending across its operations and expanded cooperation with other brands within the Geely group.
Despite those measures, profitability remains under pressure. Volvo Cars' gross margin, a closely monitored indicator of the effects of tariffs, pricing and discounting, fell to 14.7 per cent in the third quarter, compared with 20.4 per cent a year earlier.
Investor confidence has also weakened. The company's share price hit a record low during the week and has declined by 54 per cent since the beginning of the year, reflecting concerns about tariffs, slowing EV demand and the high costs associated with developing new vehicles and technologies.
The fresh restructuring measures signal a renewed effort by Volvo Cars to bring its cost base in line with prevailing market conditions. However, the company's recovery will depend not only on the success of its savings programme but also on its ability to stabilise sales, protect profit margins and compete effectively in an increasingly demanding global automotive market.