Volvo Lifts Truck Market Guidance as Markets Begin to Stabilize — Update

By Dominic Chopping

STOCKHOLM--Volvo raised its outlook for European and North American truck markets after several markets began to stabilize in recent months, with a slight improvement in some cases.

However, the Swedish truck maker cautioned that uncertainties remain, not least surrounding geopolitical developments, which could impact demand going forward. It also said that earnings were and will be hit by tariffs from the U.S.

"It is encouraging that our customers across the world continue to operate their vehicles and machines on good levels, reinforcing a solid replacement cycle and supporting service sales," Chief Executive Martin Lundstedt said. "We are well positioned to capitalize on growth when markets enter their next cyclical upturns."

Volvo now sees the European heavy-duty truck market at 305,000 vehicles in 2026, up from a previous estimate of 295,000. The North American heavy-duty truck market is seen at 265,000 vehicles, up from 250,000 previously.

New truck deliveries fell 3.4% in the fourth quarter, with North America and South America posting a significant drop on year. North America is in a freight recession and demand is at a low level with the market expected to remain weak through the first half, Volvo said.

The European truck market continued to be replacement-driven and demand from larger fleets is expected to continue through 2026. The company's Volvo and Renault truck brands both gained market share in Europe during the quarter, it added.

Truck orders fell 12% on year in the fourth quarter, as an increase in Europe failed to offset significant drops in North America, South America and Asia.

The truck unit's adjusted operating margin fell to 9.5% from 10.6% as lower volumes and tariff costs in the U.S. hit profitability.

The company's construction-equipment business--which makes up around 15% of group sales--reported a margin of 13.9%, up from 11.8%. Volvo also raised its European and North American demand outlook for the business.

RBC Capital Markets analyst Nick Housden said the report is positive overall, largely due to a better-than-expected margin performance in trucks and construction equipment and the raised market outlooks for both divisions.

"Volvo continues to manage the cycle well, and with North America truck demand likely to gain momentum through the year and with construction equipment in the early innings of a restocking phase, we think solid profitability can continue," Housden said in a note to clients.

Volvo reported a fourth-quarter net profit of 9.61 billion Swedish kronor ($1.1 billion) compared with 10.74 billion kronor a year earlier as sales fell 11% to 123.8 billion kronor. Analysts polled by FactSet had expected a net profit of 8.89 billion kronor on sales of 121.67 billion kronor.

The company said tariffs dealt a blow of 800 million kronor to fourth-quarter earnings, with around half affecting its construction-equipment business. In the first quarter, the net tariff impact is expected to be around 1 billion kronor.

Volvo proposed an ordinary dividend of 8.50 kronor and an extra dividend of 4.50 kronor. A year earlier, it proposed an ordinary dividend of 8 kronor and an extra dividend of 10.50 kronor.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

January 28, 2026 03:20 ET (08:20 GMT)