Volvo Cars has scrapped its full-year 2026 outlook for volume and cash flow after third-quarter global sales fell 10.7% year-on-year to 141,609 cars, the Geely-owned automaker confirmed in a trading update.

The Gothenburg-headquartered manufacturer attributed the decline to a deeper-than-expected slump in China and a slower-than-expected recovery in the United States, with European demand described as "resilient." The company had earlier flagged headwinds from raw materials, foreign exchange, and higher amortization and depreciation; it now warns third-quarter core earnings and cash flow will take a "significant negative impact" beyond those previously communicated pressures.

Chief Commercial Officer Erik Severinson identified the two problem markets directly. "The market downturn in China showed no signs of easing, and the recovery in the US premium segment remained below our earlier expectations," he said. "This impacted our third-quarter sales, and the same challenging market conditions have led third-party analysts to lower their sales forecasts for the premium car market for 2026."

What drove the 10.7% drop?

The Chinese auto industry remains under "significant pressure," according to the company, with no country-specific volume disclosed in the update. In the US, demand in the premium segment has not rebounded at the pace management assumed earlier in the year. Europe ran counter to those trends, posting what Volvo called resilient results on the back of order intake for fully electric cars.

How did the powertrain mix shift?

Fully electric vehicle sales rose 29% year-on-year and reached 32% of all cars delivered globally. Electrified vehicles — full battery-electric and plug-in hybrid combined — made up 53% of the total. Severinson credited the new EX60 battery-electric crossover and recently launched long-range plug-in hybrids for keeping European order intake strong.

"In Europe, we continue to see strong demand for our new cars, led by the EX60 and our recently launched long-range plug-in hybrids," Severinson said. "We are now focused on ramping up production of the EX60 and starting production of the new long-range plug-in hybrids."

What changed in the guidance?

Volvo confirmed it will not deliver on its prior 2026 outlook for volume and cash flow. It has also declined to issue a fresh short-term forward-looking statement, citing "increased market uncertainty." That removes a key reference point for analysts working on 2026 numbers until management updates its assumptions. Volvo has historically published quarterly outlook statements alongside sales releases; this update withdraws that practice for the moment.

What's the production angle?

Two programs matter for the manufacturing footprint: the EX60 battery-electric crossover, which reached European showrooms during the quarter, and a new long-range PHEV family that Volvo said is starting production. The company did not disclose plant locations, line speeds, capacity figures, or supplier impacts in the trading update. The EX60 was not given a specific volume or capacity milestone in this release, leaving ramp progress unverified against production data.

What to watch next

• October 23: Volvo's Q3 financial results, where management has promised "more details" on its strategic roadmap and "decisive actions" to improve execution
• China monthly industry data for signs that premium-segment declines deepen or stabilize
• US premium demand indicators to gauge whether the recovery curve flattens further
• EX60 production ramp updates and confirmation of throughput targets from Volvo's manufacturing leadership