Volvo Cars saw its profits plummet in 2025, according to its earnings report, and the automaker blamed the results partly on the combined impacts of U.S. tariffs and negative effects from a strengthening Swedish krona.

The company’s Feb. 5 presentation of full-year financial results showed group earnings before interest and taxes fall to 0.3 billion kronor ($33.3 million) in 2025 — or an adjusted 12.5 billion kronor after considering an 11.4 billion kronor one-time impairment charge, and a 0.8 billion restructuring cost. The figure is significantly lower than the 22.3 billion kronor EBIT the automaker reported in 2024.

Q4 was even tougher for Volvo Cars, as the automaker reported a 51% year-over-year drop in profits, as EBIT fell from 3.9 billion kronor in 2024 to 1.9 billion kronor in 2025. 

Volvo Cars President and CEO Håkan Samuelsson said in an annual report the company had anticipated the market would remain challenging in the short-term.

“That prediction came true in Q4, with external factors affecting our performance, such as EU-US import tariffs and the negative currency effect of a stronger Swedish krona,” Samuelsson said. “On top of that, revenues were affected by weak demand putting pressure on pricing, and the removal of EV incentives in the US, which negatively impacted sales in the quarter.”

Q4 revenue fell to 94.4 billion kronor against 112.1 billion kronor for the same period in 2024, according to the company’s presentation. For the full year, retail sales were down 7% to 710,000 vehicles from 763,000 in 2024, while wholesale sales fell 11% to 693,000 down from 783,000 for the previous year.

The one bright spot was a boost to the company’s cash flow from its operating and investment activities, up 118% from 1.1 billion kronor in 2024 to 2.4 billion kronor achieved last year.

“I am very pleased that we successfully executed our cost and cash plan,” Samuelsson said in the press release. “Our actions in 2025 have set us on a path to return to volume growth and improved cash flows.”

On the flip side, Volvo Cars said it will suffer negative cash effects in the first half of 2026. The company said the cash will be used to compensate for the production start of the new electric EX60, and as it temporarily builds up its inventory of XC90 and XC60 models in Sweden’s Torlslanda plant. The buildup is necessary to meet expected demand for the top-selling hybrid-powered models, according to the press release.

However, the company warned in its press release that 2026 will see the premium vehicle market continue to shrink. And, that it would continue to be a challenging year for the automotive industry as a whole “with continued pricing pressure from a competitive market, tariff effects, regulatory uncertainty and softer consumer sentiment.” 

Samuelsson in May 2025 said that challenges present by President Donald Trump’s tariffs on imported vehicles were among the main reasons for its turnaround strategy that saw the loss of 3,000 jobs at the company

The company pledged to maintain its cost-cutting program and expects to return to volume growth by the end of this year.

“We are confident of our long-term strategy grounded in a best-in-class electric product pipeline and a clear direction of travel,” Samuelsson said in the annual report. “In the short term, we will continue to make our company more efficient and lower our cost base. This will help us mitigate the challenges posed by a persistently tough external environment.”