Volvo Cars shares in Stockholm crashed the most since the company's October 2021 listing. The Swedish automaker announced another 2,500 job cuts and warned that its Chinese sales are under severe pressure.
Third-quarter deliveries in China plunged 40% as domestic brands gained ground with cheaper electric vehicles.
"Nobody will be successful with the old recipe where you had global cars developed in Europe and sold them at a premium price" in China, CEO Hakan Samuelsson told analysts on the earnings call earlier today.
Samuelsson emphasized, "Those times are gone." In other words, Volvo is no longer competitive in overseas markets.
The 2,500 job cuts represent about 6% of Volvo's workforce and will primarily affect Sweden. They form part of a turnaround strategy to save an additional 5 billion kronor, following 3,000 job cuts announced last year.
Bank of America analyst Stephanie Vincent recommended buying protection against a default by Volvo Car AB, warning that deteriorating finances and prolonged weakness in China and the U.S. are leaving the Swedish automaker's senior unsecured bonds maturing in 2029 and 2030 at risk.
Vincent added more color:
Spreads not reflecting b/s risks: Buy 5y CDS/UW ‘29s-‘30s
We move our recommendation on VOVCAB 5Y CDS to Buy Protection, from Sell Protection. We maintain our UW recommendation on the VOVCAB' 29-'30s senior unsecured bonds on fundamental deterioration at the company (free cash flow, or CFO less capex, has been negative for three straight quarters and for full-year 2025) and relative value
