Volvo Cars suffered its worst trading day on record after its shares plunged more than 25%, following a sharp drop in quarterly earnings and mounting pressure from U.S. tariffs, weaker demand and currency headwinds.
The Sweden-based automaker saw its stock fall 25.7% on Wednesday on the Nasdaq Stockholm exchange, marking the steepest single-day decline since Volvo Cars went public in October 2021. Any drop above 11.2% would already have set a negative record for the company, underscoring the severity of the selloff.
Earnings miss and profit collapse
Volvo reported fourth-quarter operating profit of 1.9 billion Swedish krona (about $210 million), down 68% year-on-year and far below analysts’ expectations of 4.7 billion krona. The company described the quarter as shaped by a “challenging external environment,” pointing to multiple pressure points across global markets.
According to Volvo, U.S. tariffs played a central role in the weaker performance, compounded by negative currency effects and soft consumer demand. The automaker also highlighted the removal of electric-vehicle purchase incentives in the United States, which reduced EV sales and added further strain on revenue.
Looking ahead, Volvo warned that 2026 is likely to remain difficult for the automotive sector. The company cited ongoing pricing pressure linked to tariffs, regulatory uncertainty and a more cautious consumer environment.
Market reaction mirrored growing concern among analysts. UBS economists projected that Volvo’s 2026 earnings before interest and taxes could fall by as much as 15%. Bernstein described the latest results as a “big step backwards,” while JPMorgan noted that both profits and sales missed market expectations.
Industry watch: Mercedes and Stellantis next
Investors are now watching whether similar pressures will impact other European automakers. Mercedes-Benz is scheduled to report fourth-quarter results on February 12, followed by Stellantis on February 26. Stellantis, which produces roughly half of the vehicles it sells in the U.S. domestically, announced last year a $13 billion investment to expand American manufacturing capacity.
Volvo Cars, owned by China’s Geely Holding, had previously benefited when U.S. tariffs on European-built cars were reduced, boosting profitability despite declining sales. However, the return of higher tariffs and tightening market conditions have again put pressure on margins. CEO Håkan Samuelsson—who returned to lead the company in March 2025—has warned that shrinking global markets and tariff impacts could significantly weigh on operating performance.
