Volvo Cars expects a stronger second half of 2026 despite reporting weak second-quarter results driven by a sharp slowdown in China and rising production costs. The Swedish automaker posted an operating profit of $82.8 million for the April–June period, but its shares fell around 8% after the results were announced.

Sales in China, the world’s largest automobile market, dropped 35% as intense price competition continued to pressure the industry. Volvo said it would avoid heavy discounting despite the challenging market, while noting that plug-in hybrid models remained one of the few bright spots in the region.

The company also warned that higher raw material costs, including lithium and aluminium, are expected to impact profitability in the second half. However, Volvo remains optimistic that increased production of its new EX60 electric SUV, along with cost-cutting measures and higher vehicle output, will support improved earnings in the coming months.

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