Volvo Q1 Profit Falls 29% as Tariffs Cloud Outlook
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Volvo Group profit slumped 29% year over year in the first quarter of 2025 as uncertainty around tariffs and the impact on global trade hurt truck demand in North America and Europe.
Demand in North America is so poor due to the tariff-induced uncertainty and long-term freight market weakness that about 1,000 employees will lose their jobs at Volvo Trucks North America and Mack Trucks, Volvo Group CEO Martin Lundstedt said in the waning moments of the parent company’s Q1 earnings call April 23.
Volvo Group posted net income of $1.03 billion in the most recent three-month period, compared with $1.45 billion in the year-ago quarter. Volvo reports in Swedish krona and conversions were correct as of April 23.
Volvo — which also manufactures construction equipment, marine engines and buses — posted $12.5 billion in revenue in Q1, a 7% decrease from $13.5 billion in the year-ago period.
Revenue from truck sales globally totaled $8.47 billion, a decrease of 9% from $9.26 billion a year earlier.
The company delivered 48,833 trucks globally in the most recent quarter, down 12% from 55,470 a year earlier. Worldwide deliveries of heavy-duty trucks decreased by 7%.
Volvo’s truck orders in Q1 totaled 55,227, up 13% compared with 48,701 a year earlier.
However, the company posted an operating margin of 10.9% in Q1, down from 13.8% a year earlier.
The margin fell on the decrease in deliveries as well as the introduction of VTNA’s new truck platform — for the redesigned flagship VNL on-highway tractor — plus what the company termed “under absorption” in U.S. truck production, it said.
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VTNA’s market share in North America was hampered by the shift to the new platform, the parent company said, whereas Mack regained market share as supply chain issues were resolved, including cab assembly issues.
“Vehicle sales were 9% lower than in Q1 2024 and as the quarter progressed, uncertainty around tariffs and their impact on global trade increased,” Lundstedt said in a statement accompanying the results.
Sales by the two divisions in North America decreased 5% year over year to 14,315 trucks from 15,056. VTNA sales in North America fell 17% to 6,510 from 7,881. Mack sales in the region totaled 7,684 trucks, up 7% from 7,153 a year earlier.
VTNA’s heavy-duty truck market share fell to 7.2% from 9.1% a year earlier while Mack’s market share rose to 6.9% from 5.3% on the back of an improved supply chain and good vocational demand, the parent group said.
European heavy-duty truck registrations fell 15% year over year in Q1.
Overall, North American retail sales fell 13% on the back of a weaker longhaul segment while the vocational segment remained stronger, the parent company said.
Recent uncertainty surrounding trade tariffs and the stricter emissions legislation led U.S. customers to adopt a “wait-and-see approach,” it said, adding that a long-expected upturn in 2025 sales colloquially known as the pre-buy was now a nonstarter.
Carriers were expected to ramp up purchasing of model year 2025 and 2026 trucks ahead of the arrival of stricter emissions regulations.
North American customers ordered 10,217 VTNA and Mack trucks in Q1, up 6% compared with 9,620 in the first quarter of 2024, with Mack the driving force. Mack orders jumped 108% in Q1 to 5,851 from 2,685 in the year-ago period on demand for vocational trucks. Volvo orders in the region slumped 33% to 4,621 from 6,909 a year earlier.
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VTNA orders were hurt by the changeover to the redesigned VNL. During the earnings call, Lundstedt characterized this as “short-term pain for long-term gain.”
Serial production of the redesigned VNL at the 2.3 million-square-foot New River Valley plant in Dublin, Va., began in early October. New River Valley underwent $400 million in upgrades ahead of the start of production.
VTNA unveiled an overhaul of its VNR regional haul tractor March 10, which will also be assembled at New River Valley.
Before then, however, at least 350 staff have been laid off at the plant due to wider demand weakness. At least 40 employees at Volvo Group’s Hagerstown, Md., powertrain plant are also being let go. And at least a further 350 employees at Mack’s Lehigh Valley Operations assembly plant in Pennsylvania have also been given their notices.
Volvo cut its 2025 North American heavy-duty truck demand forecast as a result of the hesitancy among fleet executives. The Swedish company now expects demand in the U.S., Canada and Mexico to total 275,000 trucks from 300,000 trucks previously.
Buyer appetite could also be dented by price hikes due to tariffs. VTNA and Mack told customers in March that price rises due to steel and aluminum tariffs imposed by the Trump administration are set to come into effect in May.
