Volvo Group Reports Mixed Performance in Q2 2025 Amid Stabilizing European Market and North American Uncertainty
In the second quarter of 2025, the Volvo Group faced a mixed global business climate characterized by stabilization across European markets and growing uncertainty in North America. These contrasting conditions contributed to a noticeable decline in vehicle sales, with customers in North America adopting a cautious, “wait and see” approach in response to shifting economic conditions. Despite these headwinds, the company demonstrated resilience in its service operations, which continued to show robust performance even as overall revenue declined.
According to Volvo Group President and CEO Martin Lundstedt, the company’s total net sales for the second quarter of 2025 amounted to SEK 122.9 billion, representing a 12% decrease from SEK 140.2 billion reported in the same quarter of 2024. When adjusted for currency movements, the decline in net sales narrowed to 5%. This downturn was primarily attributed to a 6% drop in vehicle sales, again adjusted for currency effects. However, service revenues remained stable and proved to be a consistent income stream for the Group, underpinned by continued strong utilization of vehicles and machinery in operation across key markets.
“Our service sales remained at the same level as in the previous year when adjusted for currency, which is encouraging,” said Lundstedt. “On a rolling 12-month basis, our service revenues amounted to SEK 126.3 billion, demonstrating the resilience and ongoing demand for our aftermarket and service-related offerings.”
Despite lower vehicle volumes and top-line contraction, Volvo Group was still able to deliver solid profitability, although down from previous highs. The Group posted an adjusted operating income of SEK 13.5 billion, down from SEK 19.4 billion in Q2 2024. The corresponding adjusted operating margin also declined to 11.0% compared to 13.9% in the year-ago quarter. Notably, the reported figures for adjusted operating income exclude a negative adjustment of SEK 4.5 billion and a positive one of nearly SEK 1 billion related to various one-time effects in the quarter.
On a reported basis, the Group’s operating income was SEK 9.96 billion in Q2 2025, significantly down from SEK 20.3 billion in the same quarter last year. This resulted in a reduced operating margin of 8.1%, down from the robust 14.5% reported previously. The decline in reported earnings was also influenced by adverse currency movements, which had a negative impact of SEK 2.31 billion on the quarter’s operating income.
Earnings per share (EPS) followed a similar downward trajectory, falling to SEK 3.64 in Q2 2025, compared to SEK 7.65 in the same period a year earlier. The drop in EPS reflects both the reduced operating profit and the overall challenging market environment the Group faced during the quarter.
Another notable metric impacted by these dynamics was the return on capital employed (ROCE) in the Industrial Operations segment. ROCE declined to 25.7%, a sharp decrease from the 41.3% recorded in the second quarter of 2024. This reduction mirrors the diminished operating profit and lower cash generation relative to capital deployed.
The Industrial Operations segment also saw a steep drop in operating cash flow, which declined to SEK 2.95 billion from SEK 9.06 billion in Q2 2024. This was due in part to lower profitability but may also have been influenced by shifts in working capital requirements, investment timing, and payment cycles throughout the organization.
While the quarter was clearly impacted by macroeconomic challenges—particularly in North America—the overall performance still highlights some enduring strengths within Volvo Group’s business model. The stability of the service business, in particular, remains a critical buffer during times of market volatility and cyclical downturns in new vehicle sales. The Group continues to benefit from a broad installed base of vehicles and equipment globally, generating recurring service and maintenance revenue streams that contribute meaningfully to financial stability.
Volvo Group remains cautiously optimistic. The company is closely monitoring macroeconomic developments and adjusting its strategies accordingly. “We are navigating a market environment marked by uncertainty in some regions while benefiting from stabilization in others,” Lundstedt said. “Our strong aftermarket business, combined with our ongoing investments in sustainable transport solutions and operational efficiencies, ensures we are well-positioned to deliver long-term value.”
Volvo Group continues to place strategic emphasis on innovation, electrification, and digital services, which are expected to become increasingly important growth drivers in the coming quarters and years. However, the company acknowledges the near-term challenges posed by market fluctuations, inflationary pressures, and supply chain constraints.
In summary, while Q2 2025 presented clear obstacles in terms of declining net sales, lower vehicle volumes, and shrinking profit margins, Volvo Group’s performance showed resilience in critical areas such as services and operational efficiency. The company remains committed to adapting swiftly and effectively in response to global market dynamics, with a clear focus on delivering sustainable, long-term growth.
