• Volvo’s financial situation is bad.
• The automaker reported losses on all fronts for the first quarter.
• As a result, it’s implementing a big cost-cutting plan.

Volvo Cars is not in great shape. After posting record sales and profits last year, the Swedish automaker is going into a cost-cutting frenzy to try to stay on top of its game. That’s because the results for this year’s first quarter are in, and it’s bad.

In short, everything was in the red when compared to the same period last year. Revenue was down 11.7%, the operating income (excluding joint ventures and associates) was down 72%, while the total operating income decreased by 59%. Meanwhile, global vehicle sales dropped by 6%, reaching 172,219 units.

To try and make things better, Volvo is kicking off massive cost-cutting efforts totaling $1.87 billion (SEK 18 billion). The cuts will include layoffs and a larger decrease in investment than originally planned. The company has also withdrawn its financial guidance for the next two years while it tries to figure out the impact of slowing sales, impending tariffs and model launches.

“The automotive industry is in the middle of a very difficult period with challenges not seen before,” said Håkan Samuelsson, Volvo Cars CEO. “Over the last few weeks, I have worked with the management team and other colleagues on a plan to make the company stronger and more resilient. While our strategy is clear, we must get better at delivering results.”

Volvo said its plan’s bulk of effects will be seen in 2026. That said, the cost cuts are not the only changes coming. The automaker will restructure its operations in the United States by creating a new sales region called Americas, which includes the U.S., Canada and the markets in Latin America. Mike Cottone, Volvo’s head of U.S. and Canada operations, will step down after almost 20 years with the company, while Luis Rezende will lead the new Americas region.

Furthermore, the Swedish automaker is relegating European operations to the bottom of the priorities list, while focusing more on the new Americas region and Greater China. Meanwhile, the last region on the list is called Europe & Rest of the World.

Speaking of China, Volvo plans on launching its first extended-range plug-in hybrid model here soon. The model was first announced back in February, when the automaker outlined its product plan for this year, which includes the EX30 Cross Country, ES90 and the refreshed S90.

Last month, Volvo Cars ousted CEO Jim Rowan and replaced him with industry heavyweight Håkan Samuelsson, who served as CEO before Rowan. Samuelsson was at the helm of the Swedish company when the Scalable Product Architecture (SPA) platform came to life. The architecture has been the base for nearly all of Volvo’s products for the past decade, including the XC90 and XC60 SUVs, as well as the S60 and S90 sedans.