Volvo Car pulls full-year guidance as China sales plunge 41%

Carmaker warns of significant hit to third-quarter core earnings and cash flow

Volvo Car on Friday withdrew its full-year guidance after warning that a further deterioration in the Chinese auto market and a slow recovery in the U.S. led to lower-than-expected third-quarter sales and a weaker outlook.

In a statement, the Swedish carmaker — which is majority-owned by China’s Zhejiang Geely Holding Group — said the market developments will also have a “significant negative impact” on third-quarter core earnings and cash flow, beyond previously highlighted raw material, currency and amortization and depreciation headwinds.

“As a result of the increased market uncertainty, Volvo Cars has also taken the decision not to provide any updated short-term forward-looking statement,” the company said.

Volvo Car sold 141,609 cars in the third quarter, an 11% drop from a year earlier.

Sales in the Greater China region plunged 41%, while sales in the Americas fell 14%.

“The market downturn in China showed no signs of easing, and the recovery in the U.S. premium segment remained below our earlier expectations,” Chief Commercial Officer Erik Severinson said.

Volvo Car had previously guided to stronger sales in the second half of the year and strong positive free cash flow in the late second half of the year, which the company expected to see cash flow end the full year approximately at break-even.

Shares in Volvo Car (VOLCAR.B) were down 2.68%.