Volvo has announced plans to slash 2,500 jobs after a sharp fall in sales triggered a share price slump that has wiped £1bn from its value.
Shares in the company, which is owned by Chinese group Geely, plunged as much as 31pc after it revealed revenues fell by 23pc in the third quarter.
Volvo announced a 5bn Swedish kronor (£376.4m) cost-cutting plan that will result in around 2,000 job cuts in Sweden and another 500 globally "through natural attrition and by targeted exit packages to employees".
The car manufacturer warned it may have to take "additional actions" after revenues in China fell by almost 50pc and it was hit by the loss of electric car subsidies in the US.
Volvo issued a profit warning and pulled its annual guidance earlier this month as sales declined.
Hakan Samuelsson, Volvo's chief executive, said on Friday: "We continue to operate in a very tough environment with strong external challenges: de-globalisation, hypercompetition and climate change.
"The third quarter of 2026 was very disappointing and reflects a year that has become far more challenging than originally anticipated. Our ongoing turnaround plan therefore needs a decisive reinforcement."
Volvo is the latest European car manufacturer to announce sweeping job losses. In July, BMW revealed it would cut 8,000 jobs in an attempt to reduce costs. Earlier this year, Volkswagen said it would cut as many as 100,000 roles out of a total workforce of 650,000. The move is expected to result in the closure of four factories.
Jaguar Land Rover, Britain's largest car manufacturer, said in September that it would cut 4,000 jobs over the next two years.
Volvo's revenues in the three months to the end of September slumped to 66.9bn Swedish kronor (£5bn), a 23pc decline from the same period a year earlier.
The car manufacturer also fell to a net loss of 5.7bn kronor (£429.2m) in the third quarter, down from a net profit of 4.5bn kronor (£338.8m) a year earlier.
Volvo, which had bet heavily on electric vehicle sales, said the axing of customer incentives in the US under Donald Trump had dented its revenue.
In 2024, the carmaker scrapped a target of transitioning to selling only electric cars by the end of the decade.
Last month, Volvo said that Mr Samuelsson would leave as chief executive next year, with Klaus Zellmer, the boss of Skoda Auto, due to take up the Volvo chief executive of the Swedish car manufacturer "no later" than October next year.
