By Dominic Chopping

STOCKHOLM--Volvo Car continues to expect volumes to grow this year due to strong demand for new models while the Swedish carmaker is working through a comprehensive cost-saving plan.

However, second-quarter profitability will be impacted by continued headwinds and the production start and ramp-up of its EX60 fully-electric midsize SUV, it said.

The EX60 was launched earlier this year and has received strong customer interest in key countries such as Sweden and Germany. With retail orders continuing to beat its own forecasts, the company is planning to increase production at its Torslanda plant in Sweden.

The company--which is majority owned by China's Zhejiang Geely Holding Group--saw strong commercial momentum in Europe through the first months of the year, helped in part by demand for its EX30 fully-electric compact SUV, but the U.S. and China markets remain challenging.

"Developments in the U.S. have been worse than we anticipated," Chief Executive Hakan Samuelsson said. "Consumer confidence is under significant pressure and the market is taking much longer to recover from the removal of incentives."

Retail sales in the Americas fell 28% on year and the company said it expects the U.S. market to remain challenging for the foreseeable future.

In China, tough competition from pricing and new models from rivals continues, but the automaker said it defended its overall market share in the country, despite registering a 17% decline in retail sales.

Overall global volumes are expected to improve in the second half of the year as the company continues to target full-year volume growth and higher free cash flow.

The Middle East conflict has further increased global market volatility and supply disruption risks though, coming on top of elevated demand uncertainty from fluctuating interest rate levels, tariffs and lower consumer confidence, it said.

Volvo Car is seeking 5 billion kronor ($539.3 million) in reduced indirect and variable costs this year after it completed an 18 billion-kronor cost-saving plan last year. It said Wednesday the plan remains on track after cutting 1.4 billion kronor in costs in the first quarter, which helped boost earnings.

Net profit attributable to shareholders rose to 1.61 billion kronor in the quarter from 1.2 billion kronor the prior year, as sales fell 12% to 72.62 billion kronor.

A FactSet forecast had net profit at 958 million kronor on revenue of 71.92 billion kronor.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

April 29, 2026 07:09 ET (11:09 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.