Although I don't want to admit it, Volvo's layoff of 3,000 employees is really effective.
When Volvo released its first-quarter financial report, the Polestar owner sitting across from me suddenly sat up straight.
He mumbled something like "Wow, the EX30 is really good at making money" and "The Swedes just love environmental protection" in a rather strange tone.
But the Polestar-Meizu co-branded phone in his right hand reflected the Rolex on his left hand, and he was as green all over as the rising trend of Volvo's stock on the screen.
Volvo, a luxury brand that once captured the hearts of many elites, has bounced back after half a year of slump.
Last week, Volvo Cars released its financial report for the third quarter of 2025. The sales volume was 160,514, a year-on-year decrease of 7% and a quarter-on-quarter decrease of 11.6%.
The decline in sales also led to a drop in revenue. The revenue of 86.4 billion kronor decreased by 6% year-on-year, and it has declined by more than 5% for two consecutive quarters. It seems that the downward trend can't be stopped.
However, on the other hand, the financial data actually looks okay. The adjusted operating profit was 6.4 billion Swedish kronor, a year-on-year increase of 10%. The gross profit margin increased from 17.7% in the previous quarter to 24.4%, and the EBIT margin also rose to 7.4%. The profitability has improved.
You know, being able to achieve a profit rebound despite the decline in sales volume and a sharp increase in the gross profit margin indicates that Volvo has either controlled its costs or made more money per car.
You know, in the second quarter of this year, there were all sorts of negative comments about Volvo. Now that Volvo has presented a financial report that is completely different from what analysts predicted, the stock price soared immediately.
So, what exactly did Volvo do to "come back from the dead"?
It seems that the "cost-cutting plan" in the second quarter is taking effect.
In April this year, Volvo released a seemingly good financial report for 2024. The sales volume reached a record high in Volvo's history (763,400 vehicles), and the revenue also increased to 400.2 billion Swedish kronor, breaking through the 400-billion mark for the first time.
But actually, Volvo was just like a person wearing a suit on the top but only shorts on the bottom.
The reason is related to the radical strategy of the former CEO, Jim Rowan.
This guy, who switched from Dyson, vigorously promoted the digitalization of car sales and full electrification, and made large investments in new energy startups such as StoreDot for fast charging and Northvolt for batteries.
However, he ignored the fact that as a multinational car company, Volvo needs to take into account the needs of different countries, and he also didn't foresee the risks brought by geopolitics.
Eventually, caught between China and the United States, Volvo was in a difficult situation. Not only was the fuel market shrinking, but it also couldn't focus on the R & D of pure-electric products. The whole year of 2024 started well but ended poorly.
In the first quarter of 2025, the net profit dropped from 4.7 billion kronor in the same period last year to 1.9 billion, a plunge of 50%. In the second quarter, due to the additional tariffs imposed by the United States, the cars couldn't be sold, resulting in a high impairment of 11.4 billion kronor in the financial statements. The financial situation was as bad as it could be.
Seeing that the situation was not good, Volvo had to rehire the former CEO, Hakan Samuelsson.
The veteran was entrusted with a crucial task and quickly came up with a "cost-cutting plan", which simply means laying off employees.
According to the official news from Volvo, most of the 3,000 employees being laid off are office staff. The layoff started from the Swedish headquarters, with about 1,200 Swedish employees on the list, and the remaining more than 1,800 are distributed in various subsidiaries around the world.
We're no strangers to this kind of drastic reform in the face of a company's operating crisis. The legendary CEO Carlos Ghosn who saved Nissan and Carlos Tavares who led Stellantis out of trouble both used the method of laying off employees.
And this method really works quickly. From the third-quarter financial report, after the layoff, the sales expenses decreased by 1.43 billion kronor, the administrative expenses decreased by 920 million kronor, and the salary and welfare expenses decreased by 1.29 billion kronor. Volvo's financial situation has improved.
The sharp rise in the stock price now is also the response from the shareholders.
But just like what happened to Nissan and Stellantis we mentioned before, laying off employees may feel good in the short term. However, if "cutting off the workforce" leads to the loss of the company's R & D ability, it will really be a case of reducing costs but increasing jokes.
So, the real test for Hakan and Volvo is yet to come.
As we can all see, now Volvo's sales volume is constantly declining, and the existing models all have their own problems.
The station wagons are well-received but have low sales. Even when the V90 is about to be discontinued, its sales volume hasn't shown any signs of improvement. Those who love it can't afford it, and those who can afford it have better choices. The once-popular EX30 in Europe is affected by the China-Europe tariffs, making its price less competitive.
As for the newly facelifted XC60, it's just the same old wine in new bottles, with no significant innovation, and its sales volume has only slightly increased year-on-year.
The highly anticipated EX90 has been delayed since 2023. Finally, this year, the supply chain problem was solved, but then the tariff war between China and the United States started, and its future is uncertain.
If Volvo doesn't come up with something new, there won't be enough 40,000 employees to lay off for long.
They also realized this in the financial report meeting. From the existing information, Volvo plans to combine and utilize the R & D results it achieved with large investments in the past few years on one hand, and strengthen the cooperation with Geely on the other hand to turn the situation around.
Looking at Volvo's R & D investment curve, they have developed the SPA3 platform, self-developed motors, two new factories, CTB and large die-casting technology in recent years, and new models are also coming out one after another.
They will further cooperate with Geely, use joint procurement to reduce material costs, and develop new models in the Chinese market.
Obviously, the XC70 just released at the end of September is a result of this approach.
It was after seeing this car that I felt Volvo had really got the hang of it.
You can't tell much from the appearance and interior. After all, the XC70 is a global model, so it has to cater to the rather plain taste of the Nordic people.
But in terms of configuration, it is fully in line with the new forces. It has all the necessary features, such as various electric seats, 360° panoramic imaging, more than a hundred kilometers of pure-electric range, and L2+ assisted driving...
These improvements in configuration, like those of the Audi E5 Sportback, Nissan N7, and Toyota BZ3X, are very Chinese-style.
Of course, there's nothing wrong with this. The unique aesthetics of an established car company combined with richer configurations is definitely a good thing for us consumers.
Source@Yuan Qicong
However, Volvo's cooperation with Geely is different from that of Audi and Nissan, which only make adjustments based on existing platforms. In terms of the powertrain, Volvo has put in some thought.
For example, the 3-speed DHT of the XC70 uses a P1 + P2 + P4 motor configuration, which is different from the P1 + P3 + P4 motor configuration of its sibling model, the Lynk & Co 08 EM - P.
The main reason for this is safety.
The "P" here stands for "position", representing the position of the motor in the powertrain.
Replacing P3 with P2 frees up the space between the output shaft after the gearbox (where P3 was originally located), providing more space for buffering in case of a vehicle collision.
The engine also has its own heritage. After Volvo separated from Ford, it jointly established Polar Bay Technology with Geely and started researching and developing domestic engines.
After some modifications to the hybrid direction, Volvo's Drive - E became the BHE15.
Later, models like the Emgrand and Lynk & Co have been using this engine, and the engine model of the XC70 now is BHE15 - BFZ.
So to speak, the XC70 is the "Pro Max" version of the "Emgrand L HiP 2022 1.5TD - DHT Pro Super Jing".
