S&P Global Ratings revised its outlooks on Zhejiang Geely Holding Group and subsidiary Geely Automobile Holdings (HKG:0175) to negative from stable, citing mounting pressure on profitability over the next 12 to 24 months.

The downgrade primarily stems from expected strains on major subsidiary Volvo Car AB's performance, due to weakening sales in Europe and China as well as higher US import tariffs, the rating agency said in a Friday release.

The negative outlooks stem from economic volatility, heightened competition, and US trade policy, offsetting an expected rise in the group's EBITDA margin to 7% in 2026.

Volvo Cars' EBITDA margin could decline to 5.1% in 2025 from 7.8% in 2024, contributing to a group-wide EBITDA margin contraction to 5.6% from 6.4% last year, S&P said.

This comes as the rating agency sees European light vehicle sales dropping by up to 2% this year and China's electric vehicle penetration rising to between 50% and 58% in the next years, further weighing on Volvo Car's performance.

Geely Automobile Holdings' strong sales growth, with unit sales expected to rise by 23% to 28%, should partly offset the group's overall profit margin pressure.

Future rating or outlook changes will depend on notable changes in the group's profitability, sales volume, or investment direction, S&P said.