Original content from New Energy Perspective (ID: xinnengyuanqianzhan)

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A recent financial report has revealed the extent of Volvo Cars' struggles.

In the third quarter of 2026, the operating profit of this Swedish automaker dropped from a gain of SEK 6.4 billion in the same period the previous year to a loss of SEK 5.6 billion. By the end of the third quarter, Volvo Cars' free cash flow stood at -SEK 8.9 billion, double the -SEK 4.3 billion recorded in the same period the previous year, indicating a worsening financial situation.

On the day the financial report was released, stock prices in Stockholm plummeted by 30% at one point, reaching a new low since its listing.

Figure/Volvo's Stockholm stock price. Source/Internet, screenshot from New Energy Perspective

The core reason for this situation is evident: Volvo is no longer performing well in the Chinese market. In the first nine months of 2026, Volvo sold a total of 73,500 vehicles in China, a year-on-year decrease of 31%. At its peak in 2023, Volvo sold over 180,000 vehicles annually. It is worth noting that these current sales figures are based on some models having their prices slashed significantly.

From this timeline, we can also glean some insights into Volvo's declining sales.

2024 marked the first year when China's new energy vehicle market shifted from electrification to the era of intelligence. Volvo's famed "safety" label gradually lost its luster amidst the rise of electrification and intelligent technologies. Meanwhile, Volvo's own intelligent capabilities were insufficient to impress discerning consumers, leading to a gradual decline in sales.

Therefore, Volvo's top management has outlined a clear path for the brand's resurgence: specifically developing six localized models for the Chinese market, leveraging Geely's technological foundation, and targeting domestic intelligence and user preferences for development, rather than simply importing global models.

However, given the highly competitive domestic new energy vehicle market today, will there still be opportunities for a lagging second-tier luxury brand like Volvo?

1. Volvo Cars Falls Behind in Both Volume and Price

Since establishing an office in Beijing in 1994, Volvo has been a fixture in China for 32 years. However, it wasn't until its acquisition by Geely in 2010 that Volvo truly reached a turning point, transforming from an imported niche brand into a second-tier luxury brand with a local production system.

According to public data, Volvo's annual sales in China have long hovered in the range of 130,000 to 180,000 vehicles, peaking at 180,200 vehicles in 2023. According to information released by Volvo Cars, 2023 was the year with the highest retail sales, operating revenue, and operating profit in its 97-year history.

Volvo's sales decline in the Chinese market began in 2024. That year, Volvo sold 763,000 vehicles globally, with an operating profit of SEK 22.3 billion.

Figure/Volvo's sales in the Chinese market. Source/Internet, screenshot from New Energy Perspective

By 2025, global sales dropped to 710,000 vehicles, with revenue of SEK 357.3 billion, a year-on-year decrease of 11%. The annual net loss was SEK 2.968 billion, marking Volvo's first annual loss in a decade.

Figure/Volvo's first annual loss in a decade. Source/Internet, screenshot from New Energy Perspective

In 2026, Volvo's cumulative sales in China for the first three quarters were 73,500 vehicles, a year-on-year decrease of 31%. In the third quarter alone, retail sales in the Greater China region were 19,900 vehicles, a 41% drop; 18,600 vehicles in mainland China, a 43% drop; regional revenue fell from SEK 14.787 billion to SEK 8.306 billion, nearly halving.

At the same time, Volvo's pricing system is also under pressure. For example, the official starting price of the Volvo S90 is SEK 406,900, but the terminal limited-time trade-in price has dropped to SEK 229,900; the XC70 has fallen from SEK 411,900 to SEK 229,900; the EX90 has dropped from SEK 459,900 to SEK 409,900 after subsidies.

Figure/Volvo's limited-time trade-in prices. Source/Internet, screenshot from New Energy Perspective

According to data from the China Automobile Dealers Association, in August 2026, Volvo's inventory depth ranked first among mainstream brands. Additionally, Volvo's dealerships in Guangzhou have shrunk from six to three, in Foshan from three to one, and some stores in Beijing and other places have also withdrawn from the network.

Under severe pressure from sales and revenue, Volvo has taken a relatively conventional approach: announcing an additional SEK 5 billion in cost cuts, including laying off about 6% of its workforce (2,500 people). Combined with the previously announced layoff plan of about 3,000 people, this means that in less than two years, Volvo has laid off 5,500 people in two rounds, equivalent to nearly 13% of its global workforce.

As we all know, this is just a desperate move by Volvo to cut costs and stop the financial bleeding in the short term. In the long term, it still depends on whether its localized new models can halt the decline in the Chinese market.

2. Who's Still Buying Volvo?

Volvo's brand story over the past few decades can be summed up in one sentence: a boron steel body that ensures no harm to occupants after a collision. If condensed into two words, it's "safety."

In the era of fuel vehicles, this narrative held true. Passive safety requires materials, structure, and cost. As a second-tier luxury brand, Volvo could rely solely on this to sustain its premium positioning, mainly because consumers recognized its value. The former president of Volvo Greater China stated that whether from external surveys or internal data, the primary factor for consumers purchasing Volvo was "brand + safety."

But today's issue is not that Volvo's safety has deteriorated, but that the scoring criteria for the "safety" exam have been rewritten by the entire industry.

Firstly, safety itself has become more democratized. Volvo's historical accumulation in passive safety remains solid, but the gap is visibly narrowing. For example, Chinese brands like Zeekr, NIO, XPeng, and Leapmotor have all achieved five-star ratings in European crash tests.

Figure/Chinese brands in European crash tests. Source/Internet, screenshot from New Energy Perspective

The trouble for Volvo is that the safety it promotes and the safety offered by domestic cars are not part of the same conversation.

Volvo talks about "who fares better after a collision," while Harmony Intelligent Mobility talks about "intelligent driving helps you avoid collisions." The former requires an accident to occur before its value is perceived, while the latter is experienced repeatedly during daily commutes. The October special edition of Harmony Intelligent Mobility's emergency avoidance records shows that its assisted driving has cumulatively avoided over 5 million potential collisions.

As consumers, which scenario do we consider safer?

On the other hand, at the 300,000 price point, models from Seres, Li Auto, NIO, and others have already made air suspension, high-level intelligent driving, and zero-gravity seats standard. When consumers sit in an XC60, what they feel is not a "difference in luxury" but a "difference in eras."

Figure/XC60. Source/Internet, screenshot from New Energy Perspective

Therefore, those who are still buying Volvo are largely paying for an "old rationality" centered on passive safety and material health. They value body rigidity and odor-free interiors, believing that a car's safety is first reflected in "withstanding accidents."

This demand is real and will not disappear.

But as more and more consumers begin to redefine safety and luxury with "what I avoid every day" and "how smooth the infotainment system is," the rational demographic that Volvo relies on is narrowing at a visible pace.

3. Where Is Volvo's Next Opportunity?

Facing difficulties, Volvo's self-rescue efforts are no longer hidden but follow a clear and decisive path. By leveraging Geely's efficiency to buy time and utilizing the Chinese team for speed, Volvo aims to first pull itself out of the financial bleeding state.

As mentioned earlier, Volvo's financial moves are the most direct: cutting budgets and laying off staff. Volvo CEO Samuelsson's goal is clear: lower the break-even point, improve cash flow, and in the long term, bring the EBIT margin back to around 8%.

The product shift is equally decisive. Volvo has abandoned the old formula of "European R&D, global sales" and will allocate six localized models exclusively for the Chinese market by 2030, forming two separate systems from the seven new models for Western markets. By mid-next year, the first two China-exclusive models will go into production, adopting Chinese technology stacks and the latest ADAS to directly address the intelligence shortfall.

Figure/Volvo's new XC70. Source/Internet, screenshot from New Energy Perspective

The depth of collaboration is also increasing, with the proportion of shared components in whole vehicles rising from 10% to 30%, procurement from the Geely system accounting for over 90%, and the shared potential of mechanical architectures and electromechanical modules exceeding 80% and 60%, respectively.

Figure/Geely-Volvo signing ceremony. Source/Internet, screenshot from New Energy Perspective

But the problem lies precisely in these numbers. Cost-cutting solves "surviving" but not "why sell at a premium." When platforms, electronic/electrical architectures, supply chains, and even software become increasingly Geely-like, the only pillars of Volvo's official premium narrative left are design, safety standards, and Nordic aesthetics.

Some analysts bluntly state that Volvo is facing the risk of becoming a "rebadged Geely." For a brand that stands on rationality, when its rationality becomes "after crunching the numbers, it's better to buy Geely," the premium story becomes hard to continue.

Clearly, Volvo's true second growth point cannot just be a "cheaper Geely-platform Volvo." It needs to offer a unique answer in Chinese software stacks and intelligent experiences that only Volvo can provide, not just a cost-effective solution of "Nordic shell with Geely foundation."

Europe's basic market and Geely's system support can keep Volvo from disappearing in the short term, but when safety is no longer an exclusive advantage, what reason can you give the most rational people to continue choosing you?

Volvo needs to answer this question with more distinctive and competitive products.

[Header image generated by AI]