Volvo Cars’ troubles continue to mount—with the automaker announcing that it will take a $1.2 billion impairment charge because of EV delays and the rising cost of tariffs.
The details: On Monday, the Swedish-based automaker said the challenges associated with the levies and meeting its previous electric vehicle goals are putting major strains on its operations.
The strains have had a major impact on Volvo’s battery-powered models, the EX90 sport utility vehicle and ES90 sedan.
Volvo’s one-time non-cash charge on net income will amount to 9 billion Swedish kronor ($887.1 million USD) in the second quarter.
What they’re saying: “Due to import tariffs the company is currently unable to sell the Volvo ES90 profitably in the United States, while ES90 margins are also under pressure in Europe for the same reason,” Volvo Cars said in a statement.
Why it matters: News of Volvo’s multi-billion-dollar charge—which was followed by a shares decline of 4.4% at the close in Stockholm—comes as the automaker continues to struggle to regain its footing in the market.
Between the lines: The product woes of the Swedish-based automaker—which is controlled by China’s Zhejiang Geely Holding Group Co.—aren’t limited to EVs, as the company looks to rebound after seeing its operating income tumble 60% in Q1.
Volvo Cars sold a total of 62,858 cars in the month of June, a 12% drop from June of last year.
Sales of fully electric vehicles—which account for 22% of Volvo Cars’ sales—fell 26%.
Volvo’s total EV sales, including plug-in-hybrids—which make up 44% of the sales volume—dropped 19%.
Bottom line: Volvo Cars is facing serious headwinds, as EV delays, high tariffs, and falling sales strain the automaker’s profitability. Its ability to compete and stay relevant in key markets like the U.S. is at risk—making it crucial that Volvo swiftly address its cost and product challenges in this tariff-heavy environment.
A quick word from our partner
It’s all inside the machine.
Minimizing risk and maximizing profits is about more than knowing what’s happening today. It’s about seeing what’s around the corner.
The Lotlinx VIN Manager is the industry’s first inventory data platform that presents powerful insights and predictions at the intersection of inventory management, customer data, and media consumption data.
Promote Smarter
Procure More Effectively
Price with Precision
Gain Unparalleled Market Clarity
Visit lotlinx.com to see how the Lotlinx machine can power your dealership.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
No-BS insights, built for car dealers. Free, fast, and trusted by 55,000+ car dealers.
