Årsredovisning 2025

comprise forward contracts, options, swap contracts and interest 
rate swaps. 
The effective portion of changes in the fair value of hedging 
instruments	is	recognised	in	Other	comprehensive	income	and	
accumulated in equity under other reserves. Amounts deferred in 
equity are recycled to the income statement in the periods in which 
the	hedged	items	affect	profit	or	loss,	within	Revenue,	Cost	of	sales,	
or	Interest	expenses,	as	applicable.	If	the	identified	relationships	are	
no longer deemed effective, the fluctuation in fair value of the hedg -
ing instrument from the last period in which the instrument was 
considered effective is recognised in the income statement.  
If	the	hedged	transaction	is	no	longer	expected	to	occur,	the	
hedge’s accumulated changes in value are immediately transferred 
from other reserves in equity through other comprehensive income 
to the income statement.
Fair value hedge
Volvo	Car	Group	applies	fair	value	hedge	accounting,	where	the	
designation should eliminate the significant accounting mismatch 
of	a	fixed	rate	liability	carried	at	amortised	cost	and	a	related	deriv -
ative contract, such as an interest rate swap which is recognised at 
fair value through profit or loss. The carrying value of the hedged 
item,	namely	a	specified	part	of	a	fixed	rate	issued	bond	is	initially	
recognised	at	amortised	cost.	Subsequent	changes	related	to	the	
hedged risks are reflected in the carrying amount of the liability as 
a	hedge	adjustment	with	the	offsetting	entry	going	to	the	income	
statement.	Changes	in	the	hedge	adjustments	of	the	hedged	item	
and the hedging instrument are both recognised in the income 
statement and the accounting mismatch is therefore eliminated. 
Gains and losses related to the interest rate swaps and changes in 
the	hedge	adjustment	of	the	hedged	fixed	rate	debt	are	recognised	
in the income statement. Hedge ineffectiveness is also reported in 
the income statement. 
Net investment hedge 
Volvo	Car	Group	designates	financial	liabilities	in	the	relevant	for -
eign	currency	against	currency	exposure	arising	from	investments	
in	the	subsidiaries.	Volvo	Car	Group	designates	debt	instruments	
in	EUR	and	USD	as	hedging	instruments	to	mitigate	the	translation	
exposure	on	their	net	investments	in	these	currencies.	Net	invest -
ments	in	foreign	operations	consists	of	the	value	of	Volvo	Car	
Group’s share of the net assets of the foreign subsidiary. The hedge 
reserve with regards to net investment in foreign operations is 
terial.	As	such,	the	nominal	amount	provides	a	reliable	approxima -
tion of fair value for reporting purposes.
Financial	liabilities	that	are	designated	as	hedged	items	in	fair	
value hedges are remeasured at fair value concerning the hedged 
risk throughout the hedging relationship period. 
Payables under supplier financing programmes
Liabilities	arising	under	supplier	financing	programmes	are	classi -
fied based on their contractual substance at initial recognition.  
Certain	balances	are	recognised	and	presented	as	Accounts	paya -
ble, while other balances are initially recognised and presented as 
Other	current	liabilities.	The	programmes	do	not	result	in	derecog -
nition of the liabilities.
Derivatives
Derivatives with positive fair values, representing the accumulated 
unrealised	gains,	are	recognised	as	Non-current	or	Current	deriva -
tive	assets.	Conversely,	derivatives	with	negative	fair	values,	repre -
senting the accumulated unrealised losses, are recognised as  
Non-	current	or	Current	derivative	liabilities.	
Realised	and	unrealised	gains	and	losses	from	fluctuation	in	fair	
value of these instruments are recognised in the income statement. 
The realised and unrealised gains and losses from fluctuations in 
the fair value of derivatives designated as hedging instruments are 
recognised	in	Other	comprehensive	income	and	accumulated	in	
other reserves in equity until the underlying transactions occur. 
The accumulated gain or loss on these hedging instruments is then 
recycled to the income statement. 
Hedge accounting 
Volvo	Car	Group	applies	hedge	accounting	when	derivative	instru -
ments and financial liabilities are included in a documented hedge 
relationship.	At	the	inception	of	the	hedge,	Volvo	Car	Group	docu -
ments the relationship between hedging instruments and hedged 
items,	as	well	as	its	risk	management	strategy	and	objective	for	
undertaking hedging transactions. 
Cash flow hedge
Volvo	Car	Group	applies	cash	flow	hedge	accounting	to	manage	  
variability in cash flows arising from highly probable forecast trans -
actions,	including	foreign	currency	exposures	on	future	sales	and	
purchases,	expected	commodity	consumption,	and	variable	interest	
payments on liabilities to credit institutions. Hedging instruments 
amortised cost. The quoted equity securities received as collateral, 
which	are	held	in	a	custodian	account,	are	not	recognised	on	Volvo	
Cars’	balance	sheet	as	the	Group	does	not	have	the	right	to	sell	or	
re-pledge	the	collateral	and	has	not	obtained	control	over	the	
equity	instrument.		Received	collateral	is	measured	based		at	fair	
value using quoted prices in active markets at the reporting date.  
Convertible loan
Volvo	Car	Group	classifies	the	convertible	loan	receivable	as	finan -
cial assets at fair value through profit or loss. The convertible loan 
was initially recognised at fair value. The convertible loan receivable 
includes a conversion option, which provides the holder with a 
 possibility to convert the loan balance into equity instruments,  
as shares in the company. This results in subsequent valuation 
based on prevailing market quotations, which ensures that changes 
in fair value are continuously recognised in the income statement. 
Equity instruments 
Volvo	Car	Group	includes	equity	instruments	as	financial	assets	at	
fair value through profit or loss, which is comprised of holdings in 
listed	and	unlisted	equity	instruments,	unlisted	warrants	and	earn-
out	rights.	Volvo	Car	Group	presents	changes	in	fair	value	of	equity	
instruments	in	Share	of	income	in	joint	ventures	and	associates	and	
Other	financial	income	and	expenses.
Bank acceptance drafts
Bank	acceptance	drafts	(BADs)	are	received	primarily	in	connection	
with	car	sales	to	dealers	in	China	and	represent	a	common	form	of	
payment	within	the	Chinese	market.	BADs	may	be	held	to	maturity,	
traded,	or	redeemed	prior	to	maturity	at	a	discount.	Volvo	Cars	may	
redeem these instruments before maturity in order to accelerate 
cash inflows, accepting a discount that reflects the early settle -
ment. BADs are measured at fair value through other comprehen -
sive income. 
Classification of financial liabilities
After initial recognition all financial liabilities are carried at amor -
tised	cost	under	the	effective	interest	rate	method,	except	deriva -
tives that constitute liabilities which are measured at fair value. 
Short-term	financial	liabilities,	including	trade	payables	and	other	
obligations due within one year, are typically measured at their nom -
inal value. Given their short maturity and the absence of significant 
interest components, the effect of discounting is considered imma -
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
95

===== SIDA 96 =====

Derivatives	with	a	positive	fair	value	are	adjusted	with	the	default	
probability	derived	from	the	Credit	Default	Swap	curve	per	counter -
party.	The	same	adjustment	is	made	for	the	derivatives	with	a	nega -
tive	fair	value	with	Volvo	Car	Group’s	own	credit	risk	using	the	
Default	Probability	of	Volvo	Car	AB	(publ.)	credit	default	swaps.
The following table outlines the valuation methods employed by 
Volvo	Car	Group	for	various	types	of	financial	instruments	as	
described:
Type of  
instrument Valuation method
Forward exchange 
 contracts
Measured using quoted forward exchange rates 
and yield curves derived from quoted interest 
rates matching the maturities of the  contracts.
FX options Currency options are measured using the 
 Garman-Kohlhagen model, an adaptation of the 
Black-Scholes model. 
Interest rate 
swaps
Measured at the present value of future cash 
flows, estimated and discounted based on appli -
cable yield curves derived from quoted interest 
rates.
Commodity  
forwards
Measured using quoted commodity prices and 
yield curves derived from quoted interest rates 
matching maturities of the contracts.
Convertible loan Measured by discounting projected future cash 
flows using the current interest rate curve and a 
credit spread derived from a benchmark portfolio. 
The convertible loan may be converted into shares 
at the same price offered to all other market par -
ticipants, without any discount or incentive.  
Unquoted equity 
instruments
Certain unobservable inputs are used by applying 
the market approach,  primarily based on the most 
recent transaction; adjustments made if significant 
changes in circumstances occur. 
Unlisted warrants Measured using the Black-Scholes model, consid -
ering vesting criteria, timing, risk-free interest 
rates, and  volatility of the underlying share price.
Earn-out rights Measured using assumptions regarding the proba -
bility and timing of earn-out payments based on 
future performance targets.
Payables under supplier financing  programmes
Supplier	invoices	may	be	subject	to	supplier	financing	programmes	
under which a financial institution pays participating suppliers early, 
and	Volvo	Car	Group	settles	the	original	invoice	amount	with	the	
institution	in	accordance	with	agreed	payment	terms.	Payables	aris -
ing from operating purchasing activities are presented as accounts 
payable until settlement, with related cash flows reported within 
operating cash flows. 
A similar programme is also used for certain suppliers related to 
investing	activities.	Under	this	programme,	the	financial	institution	
pays suppliers early and, in this specific setup, suppliers are also 
able to issue invoices at an earlier stage than under standard com -
mercial practice, thereby accelerating both invoice issuance and 
payment.	Liabilities	arising	from	this	programme	are	presented	as	
other current liabilities until settlement, with related cash flows 
reported within investing cash flows, reflecting the nature of the 
underlying activities.
While these programmes provide suppliers with earlier access to 
liquidity	(and,	in	the	investing	related	setup,	earlier	invoice	issuance),	
the	timing	of	Volvo	Car	Group’s	own	cash	outflows	remains	broadly	
unchanged compared with previous commercial practice. 
Payment	due	dates	for	the	operating	related	programme	presented	
as	accounts	payable	were	60–75	(60–75)	days	after	invoice	date.	
For	the	investing	related	programme	presented	as	other	current	lia -
bilities, payment due dates for amounts included in the programme 
were	180–360	days	after	invoice	date.	For	both	programmes,	  
comparable payables outside the programmes had payment due 
dates	of	60–75	(60–75)	days	after	the	invoice	date.
All payables included in the programmes, including information 
on payment status between the financial institution and suppliers, 
are included in the table for financial instruments by category and 
measurement level.
recorded in other comprehensive income and accumulated in cur -
rency translation reserve in equity in order to meet the translation 
difference of consolidated foreign subsidiaries. In the event of a 
divestment, the accumulated hedge effect is transferred from the 
hedge reserve in equity to the income statement.
Fair value hierarchy levels
Financial	instruments	are	divided	into	three	levels	depending	on	the	
market information available.
Level Fair value determination Comprises
1 Measurement based on quoted 
prices in active markets for 
identical assets or liabilities 
that the Volvo Car Group can 
access at the measurement 
date.
Quoted equity instruments 
measured at fair value through 
income statement.
2 Measurement based on inputs 
other than quoted market 
prices included within Level 1 
that are observable for the 
asset or liability, either directly 
or indirectly.
Derivatives designated as 
hedging instruments or meas -
ured at fair value through 
income statement.
3 Measurement based on unob -
servable inputs for the asset or 
liability.
Unquoted equity instruments 
measured at fair value through 
income statement.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Accounting for financial instruments includes performing certain 
estimates	and	judgements.	The	fair	values	of	financial	instruments	
traded in active markets are based on quoted market prices at the 
end	of	the	reporting	period.	For	financial	assets	the	fair	value	is	
based on the current bid price. The fair values of financial instru -
ments that are not traded in active markets are determined by using 
valuation	techniques.	Volvo	Car	Group	uses	a	range	of	valuation	
methods and incorporates assumptions based on market prices 
 prevailing at the end of the reporting period. Alternative techniques, 
such	as	estimated	discounted	cash	flows	(DCF	valuation),	are	
employed to assess the fair value of the remaining financial instru -
ments.	DCF	valuations	are	performed	using	the	applicable	yield	
curve	for	the	duration	of	the	instruments	for	non-optional	deriva -
tives and option pricing models are used for any optional deriva -
tives. 
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
96

===== SIDA 97 =====

The table below presents financial instruments by category and measurement level.
31 Dec 2025 31 Dec 2024
Note 
Measure-
ment level
Carrying	
value Fair	value
Carrying	
value Fair	value
Financial assets carried at amortised cost
Accounts receivable 18 — 21,241 21,241 22,780 22,780
Other financial r eceivables, non-current and current 1) 18 — 5,022 5,030 2,167 2,179
Cash and cash equivalents 20 — 57,564 57,578 56,373 56,390
83,827 83,849 81,320 81,349
Financial assets carried at fair value through profit or loss
Other long-term securities holdings 10,454 10,454 12,753 12,753
 of which convertible loan 2) 2 9,177 9,177 11,261 11,261
 of which equity instruments 3 1,277 1,277 1,473 1,473
 of which equity instruments 1 — — 19 19
Non-current and current derivative assets 2 6,666 6,666 768 768
 of which currency derivatives – designated hedging instruments 2 3,447 3,447 214 214
 of which commodity derivatives – designated hedging instruments 2 2,920 2,920 229 229
 of which interest rate swap –  designated hedging instruments 2 168 168 — —
 of which currency derivatives – not designated hedging instruments 2 131 131 117 117
 of which interest rate swap derivatives 2 — — 208 208
17,120 17,120 13,521 13,521
Financial assets carried at fair value through other comprehensive income
Marketable securities 20 2 1 1 — —
1 1 — —
Financial liabilities carried at amortised cost
Accounts payable — 57,768 57,768 56,479 56,479
 of which payable under supplier financing programmes — 4,434 4,434 3,458 3,458
 of which suppliers received payment from financial institution — 4,033 — 2,885 —
Non-current and current bonds and liabilities to credit institutions 3) — 30,790 31,797 29,493 30,242
Other financial liab ilities, non-current and current 4) 24 — 22,147 22,147 18,217 18,217
 of which payable under supplier financing programmes — 712 712 — —
 of which suppliers received payment from financial institution — 712 — — —
110,705 111,712 104,189 104,938
Financial liabilities carried at fair value through profit or loss
Non-current and current derivative liabilities 2 738 738 4,142 4,142
 of which currency derivatives – designated hedging instruments 2 269 269 2,160 2,160
 of which commodity derivatives – designated hedging instruments 2 249 249 1,206 1,206
 of which interest rate swap – designated hedging instruments 2 57 57 — —
 of which currency derivatives – not designated hedging instruments 2 57 57 625 625
 of which interest rate swap – not designated hedging instruments 2 106 106 — —
 of which interest rate swap derivatives 2 — — 151 151
1)  Includes items presented as Other non-current and current assets on 
the balance sheet, amounted to SEK 3,787 (727) m.
2)  The value of the conversion option connected to the convertible loan 
receivable to the Polestar Group is nil because the loan is convertible 
into equity securities at a price equivalent to what has been offered to 
all other market participants, without any preferential rights, dis -
counts, or incentives.
3)  The carrying amount of the bonds includes a fair value adjustment 
amounting to SEK 95 (235) m, which relates to fair value hedging.
4)  Includes the repurchase value obligation on cars sold with repurchase 
commitment which are presented as Other non-current and current 
liabilities on the balance sheet amounted to SEK 18,480 (17,241) m. 
Includes also items presented as Other non-current and current lia -
bilities in the balance sheet, amounting to  SEK 3,613 m. Excluding the 
lease liabilities which is presented as Other non-current and current 
liabilities in the balance sheet amounting to SEK 6,871 (9,699) m.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
97

===== SIDA 98 =====

The	table	below	presents	the	movements	within	Level	3,	fair	value	hierarchy.
31 Dec 2025 31 Dec 2024
Equity	instruments Equity	instruments
Opening balance 1,473 1,507
Investment 50 100
Impairment –2 —
Change in fair value –52 –163
 of which recognised in Other financial income and expenses –52 414
 of which recognised in Share of income in joint ventures and associates — –577
Exchange rate differences –192 29
Closing balance 1,277 1,473
The	table	below	presents	gains	and	losses,	interest	income	and	expenses	that	have	affected	the	income	statement	divided	per	category	of	
 financial instruments.
2025 2024
Note
Gains/ 
Losses
Interest  
income
Interest  
expenses 1)
Gains/ 
Losses
Interest  
income
Interest  
expenses 1)
Recognised in operating income 6
Financial instruments carried at fair value – 
designated hedging instruments
Currency derivatives and commodity derivatives 964 — — –1,631 — —
Financial instruments  carried at amortised cost
Accounts receivable and accounts payable –2,228 — — 810 — —
Impact on operating income –1,264 — — –821 — —
Recognised in financial income and expenses 11
Financial instruments  carried at fair value – 
not designated hedging instruments
Other long-term securities holdings –502 909 — 297 1,094 —
Interest-bearing securities — — — — 1 —
Currency derivatives and interest rate swaps 1,496 — –398 –1,018 — –777
Financial instruments  carried at amortised cost
Cash and cash equivalents and Marketable securities –1,527 1,215 –1 1,179 1,439 –1
Financial receivables carried at amortised cost –1,200 159 — 489 184 —
Financial liabilities carried at amortised cost 2) 80 — –1,703 –1,566 — –1,360
Accounts receivable and accounts payable — 26 — — — —
Impact on financial income and expenses –1,653 2,309 –2,102 –619 2,718 –2,138
1)  Excluding interest expenses on leasing liabilities which amounted to SEK –214 ( –406) m, interest expenses on pensions which amounted to SEK –288 
(–262) m and capitalised interest on R&D which amounted to SEK 973  (1,120) m.
2)  Including the financial liabilities designated for fair value hedge which  amounted to SEK 139 (–281) m. Excluding gain and losses on lease liabilities which 
amounted to SEK 6 (–6) m.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
98

===== SIDA 99 =====

Financial risks
Volvo	Cars	operations	are	exposed	to	various	types	of	financial	risks	
such as currency risk, refinancing and liquidity risk, interest rate risk, 
commodity price risk and credit risk.
The	treasury	function	of	Volvo	Cars	is	responsible	for	managing	
and controlling these financial risks, ensuring that appropriate 
financing is in place through capital market transactions, loans and 
committed	credit	facilities	and	is	responsible	for	managing	Volvo	
Cars’	liquidity.	
The	management	of	financial	risks	is	governed	by	Volvo	Car	
Group’s	Financial	Policy	Framework	which	is	approved	by	the	Board	
of	Directors	(BoD)	and	is	subject	to	review	every	second	year	or	
when otherwise required. The policy mandates the minimisation of 
the	effects	from	fluctuating	financial	markets	on	Volvo	Cars’	finan -
cial	earnings.	Policy	compliance	is	reported	to	the	CFO	on	a	monthly	
basis.	Policy	compliance	is	also	a	part	of	the	general	treasury	
reporting to the BoD. There is an alert function in place safeguard -
ing mandate limits on a daily basis.
Currency risk management
Currency	exposure	risk	arises	as	Volvo	Cars	produces	and	sells	cars	
in	various	countries.	The	currency	exposure	risk	arises	from	the	mix	
of currencies used when procuring or selling goods and services. 
Relative	changes	in	currency	rates	have	a	direct	impact	on	Volvo	
Cars’	operating	income,	financial	income	and	expense,	balance	
sheet and cash flow statement. In order to minimise the currency 
risk,	Volvo	Cars	aims	to	achieve	natural	hedging	to	the	greatest	
	possible	extent.
The currency risk is related to:
• expected	future	cash	flows	from	sales	and	purchases	made	in	
	foreign	currencies	(transaction	risk)
• changes in value of assets and liabilities denominated in foreign 
currencies	(translation	risk)
• net	investments	in	foreign	operations	(translation	risk)
Transaction exposure risk
Volvo Car Group Financial Policy Framework
Volvo	Cars’	functional	currency	is	Swedish	krona.	The	currency	
transaction	exposure	risk	arises	from	cash	flows	in	currencies	other	
than	the	functional	currency.	Sales	in	combination	with	purchases	
made	in	currencies	other	than	Swedish	krona	determine	the	trans -
action	exposure	of	the	Group.
The	Volvo	Car	Group	Financial	Policy	Framework	states,	regarding	
currency transaction risk management, that up to 80 per cent of the 
future	expected	cash	flows	in	the	coming	24	months	and	up	to	60	
per	cent	of	the	future	expected	cash	flows	in	the	coming	25	to	48	
months can be hedged with adequate financial instruments, such 
as	currency	options,	forward	contracts,	foreign	exchange	swaps	
or	combined	instruments	with	maturities	matching	the	expected	
timing of cash flows from sales and purchases made in foreign  
currencies.	Hedging	strategies	using	financial	instruments	for	long-
term	exposures,	over	48	months,	require	approval	by	the	Board	of	
Directors	(BoD).	The	management	of	currency	risk	within	the	above	
stipulated intervals is delegated by the BoD to the treasury function 
via	the	CFO.
For	currency	risk	management	purposes,	transaction	exposure	is	
expressed	in	terms	of	Cash	Flow	at	Risk	(CFaR),	which	is	the	maxi -
mum	loss,	in	one	year,	at	a	95	per	cent	confidence	level.	The	CFaR	is	
based	on	the	cash	flow	forecast,	currency	exchange	rates,	market	
volatility and correlations. 
The hedging mandates are proposed by the treasury function and 
approved	by	the	CFO	and	are	expressed	as	a	strategic	hedge	level	of	
CFaR.	The	strategy	allows	for	mandates	to	deviate	from	a	bench -
mark. The deviation mandate is given as a tactical mandate in terms 
of timing. The hedging mandates are revised at least quarterly.
Status at year end
The table below presents the distribution of the total currency 
inflow	and	outflow	for	Volvo	Cars.	
Inflow, % Outflow, %
2025 2024 2025 2024
CNY 18 19 38 43
EUR 28 30 38 34
GBP 8 7 2 2
JPY 2 2 3 2
USD 22 21 16 16
Other 23 21 4 4
The	CFaR	at	year	end	for	the	cash	flows	over	a	one-year	horizon	for	
the	Group,	excluding	hedges,	was	approximately	SEK  4,137 (5,168)	
m. The table below presents the percentage of the forecasted cash 
flows	that	were	hedged	(expressed	both	in	nominal	terms	and	in	
CFaR).	
0–12 months 13–24 months 25–48 months
 2025 2024 2025 2024 2025 2024
Nominal hedge, % 35 39 11 12 0 2
CFaR hedge, % 43 42 19 28 0 5
The	table	below	presents	cash	flow	hedge	volumes	by	maturity	for	the	10	largest	exposure	currencies,	nominal	amou nts	in		local	currency	(M)1)
Maturity CAD CHF CNH EUR GBP KRW NOK PLN TRY USD
Total fair value 
of derivatives 2)
Average hedge rate — 12.35 1.34 11.20 12.74 — 0.93 2.56 — 10.17
1–12 months — –365 6,169 796 –1,285 — –350 –1,370 — –1,595 2,321
13–24 months — –355 92 212 –274 — — — — –555 857
1)  The average duration of the portfolio was 8 (10) months. 
2)  The fair value of the outstanding derivatives for hedging of currency price risk in future commercial cash flows amounted to  
SEK 3,178 ( –1,946) m.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
99

===== SIDA 100 =====

The	table	below	presents	the	translation	exposure	of	net	invest -
ments in foreign operations.
Currency
Investments in  
foreign operations 
CNY 14,238
EUR 12,009
USD 6,077
BRL 934
JPY 728
TRY 622
AUD 398
GBP 377
Other 1,366
Total 36,749
Refinancing and liquidity risk management
Capital Structure
Volvo	Cars	shall	maintain	a	capital	structure	that	ensures	a	prudent	
balance between financial risk and cost of capital while supporting the 
Group’s strategic transformation under varying market conditions. 
The	capital	structure	should	ensure	Volvo	Cars	maintains	strong	
access to capital markets and progresses toward achieving an 
investment-grade	credit	rating.	Volvo	Cars	current	external	rating	
by	Moodys	is	Ba1	and	BB+	by	Standard	&	Poor’s.
Refinancing risk management
Volvo Car Group Financial Policy Framework 
Refinancing	risk	is	the	risk	that	Volvo	Car	does	not	have	access	to	
adequate financing on acceptable terms at any given point. 
All drawdowns on new loans are evaluated against future liquidity 
needs	and	investment	plans.	Volvo	Cars	should	for	the	coming	12	
months, at any given time, have available committed financing for 
investments and for repayment of maturing debt. To limit the risk of 
	refinancing,	debt	maturing	over	the	next	12	months	should	not	
exceed	25	per	cent	of	total	debt.	
Status at year end
At the end of the year, the outstanding debt of bonds and liabilities 
to	credit	institutions,	excluding	lease	contracts	and	transaction	
costs,	in	Volvo	Cars	was	SEK	30,790	(29,347)	m.	During	the	year	
bond	and	liabilities	to	credit	institutions	of	SEK	 7,363	(7,797)	m	
matured or were amortised. The remaining credit duration of out -
Translation exposure risk
Volvo Car Group Financial Policy Framework
Translation	exposure	risk	at	Volvo	Cars	refers	to	the	conversion	of	
balance sheet items and net investments in foreign operations into 
the	Group’s	functional	currency,	the	Swedish	krona.	This	risk	arises	
due	to	fluctuations	in	exchange	rates	over	time.	The	financial	posi -
tion of assets and liabilities in foreign currencies is monitored and 
managed	daily	to	mitigate	income	statement	impacts.	Part	of	the	
translation	risk	in	investments	in	the	Eurozone	and	Americas	is	
hedged using debt instruments, known as net investment hedges.
The	recognition	of	translation	effects	varies	based	on	the	under -
lying	exposure.	
Translation exposure: Comprises Recognition:
Operational assets 
and liabilities
Accounts receivable, 
Accounts payable, and 
Warranty provisions
Other operating 
income and expenses
Financial assets and 
liabilities
Cash at bank, depos -
its, equity repurchase 
agreements, converti -
ble loan, derivatives, 
bonds and loans. 
Other financial income 
and expenses
Investments in  
foreign operations
Assets and liabilities Other comprehensive 
Income
Status at year end
At the end of the year, the total translation effect of investments in 
foreign	operations	was	SEK	–4,646	(965)	m,	the	effects	are	recog-
nised in equity through other comprehensive income. A 10 per cent 
change	in	the	Swedish	krona	against	major	currencies	would	have	a	
net impact on net investments in other comprehensive income of 
approximately	SEK  3,675	(4,016)	m.		
standing	debt	was	3.2	(2.9)	years.	At	year	end,	debt	maturing	over	
the	next	12	months	amounted	to	8	per	cent	of	total	debt.
In	January,	a	EUR	500	m	bond,	issued	in	2017,	was	repaid.		
In	March,	a	drawdown	of	USD	438	m	was	made	under	an	existing	
green bilateral loan facility. The facility was originally signed in 
2023/2024	and	with	final	repayment	during	2035.		
In	June,	EUR	500	m	was	raised	through	a	green	bond	issuance	
with a tenor of four years.  
In	September,	a	new	green	bilateral	eight-year	loan	agreement	of	
EUR	150	m	was	signed.	The	loan	facility	remains	undrawn	as	of	the	
end of 2025.
In	October,	an	existing	eight-year	credit	facility	amounting	to	CNY	
3,090 m was terminated.  
In	November,	the	first	extension	option	on	the	existing	sustaina -
bility-linked	Revolving	Credit	Facilities	was	exercised,	extending	
maturities	by	one	year.	The	updated	maturities	for	the	Revolving	
Credit	Facilities	of	EUR	500	m	and	EUR	1,500	m	are	in	2028	and	
2030, respectively.
The table below presents the outstanding debt.
Funding Currency
Nominal amount in 
local		currency	(M)
Nominal-
amount in 
SEK	(M)
Bank loan USD 23 215
Bank loan SEK 357 357
Bank loan GFF 1) SEK 1,000 1,000
Bank loan GFF 1) EUR 182 1,967
Bank loan GFF 1) USD 438 4,037
Green bond EUR 2,000 21,634
Green bond SEK 1,500 1,500
Other PLN 29 75
Total 30,785
1)  Loans agreed to solely finance eligible projects in accordance with the 
Green Financing Framework.
In	relation	to	all	external	financing,	there	are	information	undertak -
ings	and	covenants	in	line	with	the	Loan	Market	Association	(LMA)	
and capital market standards. These are monitored and calculated 
quarterly to fulfil the terms and conditions stated in the financial 
agreements.	Covenants	are	based	on	standard	measurements	such	
as	EBITDA	and	Net	debt.	At	the	end	of	the	year,	there	is	substantial	
headroom in the fulfilment of all covenants.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100

===== SIDA 101 =====

Bonds and liabilities to credit institutions –  
amortisation schedule 
33323126 27 28 29 30 34 35
Bonds and liabilities to credit institutions – amortization schedule, MSEK
0
4,000
3,000
2,000
1,000
5,000
6,000
8,000
7,000
Bank loan
Bank Loan GFF1)Green Bond
1)  Loans GFF (Green Financing Framework): Loans agreed to solely 
finance eligible projects in accordance with the Green Financing 
Framework.
Outstanding bonds and liabilities to credit institutions 
(at successive year end) 
32313025 26 27 28 29 33 34 35
0
20,000
15,000
10,000
5,000
25,000
30,000
40,000
35,000
Bank loan
Bank Loan GFF1)Green Bond
Outstanding bonds and liabilities to credit institutions 
(at successive year end), MSEK
1)  Loans GFF (Green Financing Framework): Loans agreed to solely 
finance eligible projects in accordance with the Green Financing 
Framework.
31 Dec 2025 31 Dec 2024
Less	than	 
3 months
3 months  
to 1 year 1–5 years
Over	 
5 years
Less	than	 
3 months
3 months  
to 1 year 1–5 years
Over	 
5 years
Financial assets
Other long-term securities holdings 1) — — 9,177 — — — 11,263 —
Other non-current interest-bearing receivables — — 1,141 94 — — 1,312 128
Non-current derivative assets — — 1,743 — — — 183 100
Other non-current assets — — 3,951 266 — — 2,830 154
Total financial non-current assets — — 16,012 360 — — 15,588 382
Accounts receivable 2) 19,733 1,508 — — 20,442 2,338 — —
Current derivative assets 1,623 3,300 — — 222 263 — —
Marketable securities — 1 — — — — — —
Cash and cash equivalents 57,564 — — — 56,373 — — —
Other current assets 2,581 888 — — 3,344 907 — —
Total financial current assets 81,501 5,697 — — 80,381 3,508 — —
Total financial assets 81,501 5,697 16,012 360 80,381 3,508 15,588 382
Financial liabilities
Liabilities to credit institutions, non-current — — 4,301 2,422 — — 2,475 1,410
Non-current bonds — — 21,599 46 — — 13,039 5,787
Other non-current interest-bearing liabilities — — 9,265 2,277 — — 9,416 1,438
Non-current derivative liabilities — — 253 — — — 1,252 —
Other non-current liabilities — — 516 10 — — 2,191 —
Total financial non-current liabilities — — 35,934 4,755 — — 28,373 8,635
Accounts payable 52,248 5,520 — — 52,811 3,668 — —
Liabilities to credit institutions, current 67 855 — — 89 970 — —
Current bonds 1,500 — — — 5,723 — — —
Other interest-bearing liabilities, current 8,245 8,692 — — 9,996 7,067 — —
Current derivative liabilities 276 209 — — 989 1,901 — —
Other current liabilities 2,952 1,497 — — 2,063 1,904 — —
Total financial current liabilities 65,288 16,773 — — 71,671 15,510 — —
Total financial liabilities 65,288 16,773 35,934 4,755 71,671 15,510 28,373 8,635
1)  Maturity structure of the other long-term securities holdings does not include holdings in listed and unlisted equity instruments, such as holdings in 
other entities. 
2)  For aging analysis of accounts receivable see Note 18 – Accounts receivable and other current and non-current assets.
The	table	below	presents	the	maturity	structure	of	Volvo	Cars	Group’s	financial	assets	and	liabilities.	The	figures	shown	are	contractual,	
	undiscounted	cash	flows	which	Volvo	Cars	is	liable	to	pay	or	eligible	to	receive.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
101

===== SIDA 102 =====

Liquidity risk management
Volvo Car Group Financial Policy Framework
Liquidity	risk	is	the	risk	that	Volvo	Cars	is	unable	to	meet	ongoing	
financial obligations on time. In order to meet seasonal operational 
volatility,	Volvo	Cars	shall	ensure	continuous	availability	of	liquidity	
through unutilised credit facilities, accessible cash and cash equiva -
lents, and marketable securities corresponding to 10 per cent or 
more	of	revenue.	Future	liquidity	needs	and	investment	plans	are	
the basis for the risk assessment of liquidity risk management.
Factoring
Volvo	Cars	customer	invoices	may	be	subject	to	factoring	with	a	
financial	institution.	This	enables	Volvo	Cars	to	receive	payment	for	
its receivable within a few days after invoicing and thus be able to 
release liquidity at an earlier stage than would otherwise have been 
the case. 
Supplier financing programmes 
Volvo	Cars	participates	in	supplier	financing	programmes.	The	prin -
cipal purpose of the arrangements is to facilitate efficient payment 
processing and enable the willing suppliers to receive payments 
from the financial institutions before the invoice due date. The 
arrangement	does	not	extend	the	payment	terms	or	alter	the	timing	
of the Group’s cash outflows beyond the normal terms agreed with 
non-participating	suppliers.	However,	participating	suppliers	may	
under the programme, issue invoices earlier than under standard 
commercial practice, enabling earlier settlement by the financial 
institution.
Status at year end
At	the	end	of	the	year,	Volvo	Cars	cash	and	cash	equivalents,	mar -
ketable	securities	and	committed	credit	facilities	amounted	to	SEK	
80,822 (88,549)	m,	approximately  23 (22)	per	cent	of	revenue.	
The	liquidity	of	Volvo	Cars	is	strong	considering	the	maturity	profile	
of	the	external	debt,	the	balance	of	cash	and	cash	equivalents,	  
marketable securities and available credit facilities from banks. 
Undrawn committed credit facilities
31 Dec
2025
31 Dec
2024
Expiring within one year 1,623 4,808
Expiring after one year but within five years 21,634 22,895
Expiring after five years — 4,473
Total 23,257 32,176
Interest rate risk management
Changes	in	interest	rates	will	impact	Volvo	Cars’	income	statement	
and the value of financial assets and liabilities. The return on cash 
and cash equivalents and marketable securities, as well as the cost 
of liabilities to credit institutions and issued bonds are impacted by 
changes	in	interest	rates.	The	exposure	can	be	either	direct	from	
interest-bearing	debt	or	indirect	through	leasing	or	other	financing	
arrangements. 
Volvo Car Group Financial Policy Framework
According	to	the	policy,	the	interest	rate	risk	in	Volvo	Cars’	net	debt	
position has a benchmark duration of 12 months. The policy allows 
for	a	deviation	of	–6/+6	months	from	the	benchmark.	The	interest	
rate mandate is proposed by the treasury function and approved by 
the	CFO.	The	hedging	mandate	shall	be	revised	at	least	quarterly.	  
To	manage	interest	rate	risk,	Volvo	Cars	uses	interest	rate	swaps.
Status at year end
At	the	end	of	the	year,	Volvo	Cars’	interest-bearing	assets	consisted	
of	cash	at	bank,	time	deposits	and	interest-bearing	securities.	The	
average	interest	fixing	term	on	these	assets	was	one	(one)	month.	
The	average	interest	fixing	term	on	debt	was 	13	(10)	months.	At	
year-end	the	duration	of	the	net	debt	position	was	11	(8)	months.	
The	average	cost	of	borrowing	was	4.32	(4.67)	 per cent.
The table below presents the estimated effect of a parallel shift in 
interest	rate	curves	up	or	down	by	one	per	cent	(100	basis	points)	on	
all	exposed	external	debt	and	interest	rate	derivatives.	The	effect	
relates to market value changes in debt and the effect on the com -
ing year’s interest cashflow. 
Interest rate sensitivity, effect on Finance net 2025 2024
Market rate +1% –65 –92
Market rate –1% 66 94
The impact from cash and cash equivalents and marketable securi -
ties	is	immaterial	as	the	fixed	interest	period	of	the	asset	portfolio	is	
short as it is dominated by cash at bank.
Benchmark rate reform
The interest rate benchmark reform refers to the transition from the 
existing,	traditional	interest	rate	benchmark	–	Interbank	Offered	
Rates	(IBOR)	–	to	new	risk-free	benchmarks.	
Volvo	Cars	is	currently	exposed	to	external	interest	rate	risk	in	
EUR,	SEK	and	USD	from	the	EURIBOR,	STIBOR	and	SOFR	bench -
marks respectively. 
For	EUR	and	SEK	there	is	no	expected	change	(risk	of	conversion)	
in the related floating benchmarks in the short to medium term and 
thus cash flow risk is not affected. The related benchmarks are 
 currently not scheduled for termination and will therefore continue 
to dictate interest cash flows for floating financial assets, financial 
liabilities and derivatives in these currencies. Nonetheless, a switch 
to	ESTR	(EUR)	and	SWESTR	(SEK)	denominated	risk-free	floating -
benchmarks will be a feature of the future financial landscape and 
may affect financial assets, financial liabilities and derivative instru -
ments.	Suitable	instruments	are	already	available	to	cater	for	these	
new benchmarks and can be implemented when the need arises. 
Volvo	Cars	expects	continued	100	per	cent	effectiveness	of	related	
hedges and no net interest impact.
Commodity price risk management
Commodity	price	risk	refers	to	the	potential	increase	in	material	
costs	due	to	rising	commodity	prices	in	global	markets.	Such	
	fluctuations	can	affect	Volvo	Cars’	cash	flow	and	earnings.
Volvo Car Group Financial Policy Framework
Forecasted	cash	flows	for	the	purchase	of	commodities	for	the	
coming 48 months can be hedged up to 70 per cent with adequate 
financial instruments. The hedging mandates are proposed by the 
treasury	function	and	approved	by	the	CFO.	Hedging	mandates	shall	
be revised at least quarterly.
Status at year end 
Raw materials
Volvo	Cars	manages	the	risk	of	changes	in	raw	material	prices	in	
forecasted consumption with futures and forwards contracts. 
	During	the	year,	Volvo	Cars	incurred	costs	for	raw	materials	of	
approximately	SEK	23,003	(21,178)	m.	A	ten	per	cent	change	in	the	
prices of raw materials has an impact on operating income of 
approximately	SEK	2,300	(2,118)	m,	excluding	hedges.	Hedging	  
is performed for forecasted consumption of metals.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
102

===== SIDA 103 =====

Investments	in	interest-bearing	securities	are	measured	at	fair	value	
through the income statement and the credit risk is reflected in their 
fair values. The credit risk of those financial counterparties which 
are	related	parties	is	considered	when	pricing.	The	risk	Volvo	Cars	is	
exposed	to	in	its	convertible	loan	receivable	is	reflected	in	its	fair	
value. 
Status at year end
At	the	end	of	the	year,	the	maximum	amount	exposed	to	financial	
credit	risk	amounted	to	SEK	 73,408 	(68,402)	m.	This	encompasses	
cash and cash equivalents	and	marketable	securities	SE K	57,	565	
(56,373)	m,	convertible	loan	receivable	SEK	 9,177 (11,261)	m	and	
derivative	assets	SEK	 6,666 (768)	m.	The	maximum	amount	
exposed	to	credit	risk	for	financial	instruments	is	best	represented	
by	their	fair	values,	see	table	Financial	instruments	by	category	and	
measurement level in this note. 
Derivative	contracts	are	subject	to	master	netting	agreements	
(ISDA),	no	collateral	has	been	received	or	posted.	The	table	below	
shows	derivatives	covered	by	master	netting	agreements	(ISDA).
Net position  
for derivative 
instruments Gross
Offset	
in  
Balance 
sheet
Net in  
Balance 
sheet
Master  
netting 
agree-
ments
Net 
position
31 Dec 2025
Derivative 
assets 6,815 — 6,815 –690 6,125
Derivative 
liabilities 693 — 693 –690 3
31 Dec 2024
Derivative 
assets 954 — 954 –832 122
Derivative 
liabilities 4,137 — 4,137 –832 3,305
Commercial credit risk
The	commercial	credit	risk	arises	from	accounts	receivables.	For	
the	risk	in	customer	and	dealer	financing,	the	objective	is	to	have	a	
sound and balanced credit portfolio and to engage in credit moni -
toring	by	means	of	detailed	procedures	which	include	follow-up	
and repossession. In cases where the credit risk is considered 
unsatisfactory, a letter of credit or other instruments are used. 
The	maximum	amount	exposed	to	commercial	credit	risk	is	the	  
carrying	amount	of	accounts	receivables,	see	table	for	Financial	
instruments	by	category	and	measurement	level	in	this	note.	For	
quantification of credit risk in accounts receivable, see Note 18 – 
Accounts	receivable	and	other	current	and	non-current	assets.
Electricity
Volvo	Cars	manages	the	changes	in	prices	for	electricity	by	hedging	
the coming 48 months consumption using forward contracts. The 
hedging	is	performed	for	electricity	usage	in	the	European	factories	
and is managed under an advisory contract. 
A 10 per cent change in the electricity spot price has an impact on 
the	income	statement	of	SEK	35	(28)	m.
Credit risk management
Volvo	Cars’	credit	risk	can	be	divided	into	financial	counterparty	
credit risk and commercial credit risk. These risks are described in 
the following  sections.
Financial counterparty credit risk
Volvo Car Group Financial Policy Framework
Credit	risk	on	financial	transactions	is	the	risk	that	Volvo	Cars	will	
incur	losses	as	a	result	of	non-payment	by	counterparties	related	to	
Volvo	Cars’	bank	accounts,	interest-bearing	securities,	time	depos -
its or derivative transactions. Investments should meet the require -
ments	of	low	credit	risk,	high	liquidity	and	the	exposure	with	any	
	single	counterparty	is	limited.	All	external	counterparties	used	for	
investments and derivative transactions shall have a credit rating of 
minimum	A-	(S&P	or	equivalent	rating)	and	ISDA	agreements	are	
required for counterparties with which derivative contracts are 
traded.	Limits	are	established	according	to	counterparty	credit	rat -
ing	and	limit	usage	is	monitored	for	the	Volvo	Cars’	treasury	coun -
terparties and deposits are diversified between relationship banks. 
Subsidiary	bank	balances	are	diversified	in	order	to	limit	credit	risk.	
The financial counterparty credit risk regarding cash and cash 
equivalents is reflected in the measurement at amortised cost. The 
expected	credit	loss	on	these	balances	is	considered	insignificant	as	
maturities are short and the credit quality of the counterparties is 
high.	Volvo	Cars	applies	the	general	model	for	assessing	impairment	
reserve regarding time deposits recognised at amortised cost. The 
assessment is based on the counterparty’s credit rating, the esti -
mated	exposure	at	default,	probability	of	default	and	loss	given	
default. The impairment assessment in relation to time deposits is 
considered immaterial. 
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
103

===== SIDA 104 =====

The table below presents the outstanding derivatives within hedge accounting.
31 Dec 2025
Nominal 
amount 
Financial	
assets
Financial	
liabilities Net
Ineffectiveness 
reflected in 
income statement Tax
Hedge  
reserve
after	tax
Recycled	from	
other compre-
hensive income
Cash flow hedge – with hedge reserve
Currency risk
– Foreign exchange swaps and forward 
contracts 66,511 3,431 –265 3,166 — –630 2,536 –1,322
Commodity price risk
– Raw material forward contracts 14,061 2,910 –236 2,674 –113 –551 2,010 –412
– Electricity forward contracts 310 10 –13 –3 — 1 –2 81
Interest rate risk
– Interest rate swap 3,245 25 — 25 — –5 20 —
Total 6,376 –514 5,862 –113 –1,185 4,564 –1,653
Net investments hedge – with hedge 
reserve
Currency risk
– EUR and USD-denominated debt 11,129 — –660 –660 — 136 –524 50
Total 6,376 –1,174 5,202 –113 –1,049 4,040 –1,603
Fair value hedge – without hedge 
reserve
Interest rate risk
– Interest rate swap 15,414 143 –57 86 –9 — — —
31 Dec 2024
Cash flow hedge – with hedge reserve
Currency risk
– Foreign exchange swaps and forward 
contracts 92,268 214 –2,160 –1,946 — 401 –1,545 681
Commodity price risk
– Raw material forward contracts 15,968 229 –1,094 –865 –81 162 –622 –72
– Electricity forward contracts 462 — –112 –112 — 23 –89 4
Total 443 –3,366 –2,923 –81 586 –2,256 613
Net investments hedge – with hedge 
reserve
Currency risk
– EUR and USD-denominated debt 9,895 — –1,409 –1,409 — 290 –1,119 50
Total 443 –4,775 –4,332 –81 876 –3,375 663
Fair value hedge – without hedge 
reserve
Interest rate risk
– Interest rate swap 17,744 265 –31 234 — — — —
Hedge accounting
Volvo	Car	Group	generally	applies	hedge	accounting	when	hedging	
interest rate risk related to funding activities and when hedging 
future	operational	cash	flows.	Volvo	Car	Group	also	applies	hedge	
accounting for hedges of net investments in foreign operations. The 
hedge strategy is to mitigate the uncertainty in future cash outflow 
and to reduce income statement volatility.
Effectiveness	testing	is	performed	at	inception	of	the	hedging	
relationship and monitored regularly. The test is performed by com -
paring the critical terms of the hedging instrument and the hedged 
item to be equal. The critical terms may be foreign currency or com -
modity nominal amount, cash flows and time of maturity. If critical 
terms match and the credit risk of the counterparty has not changed 
significantly, the hedge relationship can be deemed highly effective 
going	forward.	For	more	information	see	Hedge	accounting	princi -
ples under the section Accounting policies in this note. 
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
104

===== SIDA 105 =====

The table below presents the fair value hedges by maturity date.
Carrying amount 
31 Dec 2025 
Nominal  
amount
Fair	value,	
hedged 
item
Fair	value,	 
hedging 
instrument 
Ineffectiveness 
reflected in income 
statement
Derivative  
assets
Derivative 
liabilities
Variable	 
benchmark
Maturity date
2027 350 –52 51 –1 51 — Euribor 3m
2028 500 –27 21 –6 45 –24 Euribor 3m
2029 275 30 –33 –3 — –33 Euribor 3m
2030 300 –46 47 1 47 — Euribor 3m
Total –95 86 –9 143 –57
Carrying amount 
31 Dec 2024
Nominal  
amount
Fair	value,	
hedged 
item
Fair	value,	 
hedging 
instrument 
Ineffectiveness 
reflected in income 
statement
Derivative  
assets
Derivative  
liabilities
Variable	 
benchmark
Maturity date
2025 400 1 –2 –1 — –2 Euribor 3m
2027 350 –88 88 — 88 — Euribor 3m
2028 500 –53 48 –5 77 –29 Euribor 3m
2030 300 –94 100 6 100 — Euribor 3m
Total –234 234 — 265 –31
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
105

===== SIDA 106 =====

NOTE 21 EQUITY
ACCOUNTING POLICIES
Share-based payments
Equity-settled	share-based	payments	in	connection	with	employee	
incentive plans are recognised in equity and settled using treasury 
shares.	See	Note	9	–	Share-based	remuneration.  
Group contributions and unconditional shareholders’  
contributions
Distributed group contributions to the main owner are recorded in 
equity,	along	with	the	tax	effect.	Group	contributions	received	from	
the	main	owner	and	the	tax	effect	on	these	contributions	are	recog -
nised in equity in accordance with the principles for shareholders’ 
contributions. 
Unconditional	shareholders’	contributions	received	from	the	main	
owner are recognised in equity. 
The share capital consists of 2,979,524,179 common shares of 
class	B.	Each	share	carries	one	vote.	A	common	share	of	class	B	
entitles its holder to dividend as determined by the shareholders 
meeting. All issued shares are fully paid. At 31 December 2025, 
Volvo	Car	Group	holds	14,894,838  (5,020,194)	own	class	B	shares.
In	2024,	Volvo	Car	AB	(publ.)	distributed	62.7	per	cent	of	Volvo	
Cars’	shareholding	in	Polestar	Automotive	Holding	UK	PLC	to	Volvo	
Cars’	shareholders	by	way	of	a	share	split	(2:1),	a	reduction	of	the	
share capital through redemption of shares, and an increase of the 
share capital through a bonus issue without issuance of new shares. 
Due	to	the	ownership	structure	of	Volvo	Car	Group,	the	distribution	
of	shares	was	a	common	control	transaction.	Consequently,	the	  
distribution has been accounted for at carrying values, including 
transaction costs recognised directly in equity. 
During April 2024, the share split temporarily increased the number 
of shares and votes by 2,979,524,179, to 5,959,048,358. In May 
2024, the 2,979,524,179 new redemption shares of class B were 
redeemed as part of the automatic share redemption. Thereafter, 
the total number of shares and votes amounts to 2,979,524,179, 
which	is	the	same	as	prior	to	the	distribution.	On	8	May	2024,	the	
distribution	of	the	Polestar	shares	was	completed.  For	further	infor-
mation,	see	Note	12	–	Investments	in	joint	ventures	and	associates.
Change in number of outstanding 
shares 31 Dec 2025 31 Dec 2024
Outstanding shares at 1 January 2,974,503,985 2,979,524,179
Share split (2:1) — 2,979,524,179
Redemption of redemption shares — –2,979,524,179
Acquisition of treasury shares –12,500,000 –6,500,000
Issue of treasury shares 2,625,356 1,479,806
Outstanding shares at  
31 December 2,964,629,341 2,974,503,985
The share premium	relates	to	issue	in	kind	attributable	to	Zhejiang	
Geely	Holding	Group	Co.,	Ltd’s	acquisition	in	year	2010.	Share	pre -
mium	also	include	capital	received	(reduced	by	transaction	costs)	in	
excess	of	par	value	of	issued	capital.	
Other contributed capital  consists of Group contributions from 
Geely	Sweden	Holding	Group	and	unconditional	shareholders’	con -
tribution	from	Shanghai	Geely	Zhaoyuan	International	Investment	
Co.,	Ltd.
 
The currency translation  reserve	comprises	exchange	rate	differ-
ences of hedge instruments of net investments in foreign operations 
and	exchange	rate	differences	resulting	from	the	translation	of	
financial reports of foreign operations that have prepared their 
financial	reports	in	a	currency	other	than	Volvo	Car	Group’s	report -
ing		currency.	The	parent	company	and	Volvo	Car	Group	present	
their	financial	reports	in	SEK.
NOTE 20 MARKETABLE SECURITIES AND CASH AND CASH 
EQUIVALENTS
ACCOUNTING POLICIES
Marketable securities
Marketable	securities	are	highly	liquid	short-term	interest-bearing	
securities and deposits that are considered easily convertible to 
cash and have a term of more than three months and less than one 
year from acquisition date. 
Cash and cash equivalents
Cash	and	cash	equivalents	are	liquid	funds,	deposits	and	short-term	
interest-bearing	securities	that	are	considered	easily	convertible	to	
cash and have a term of three months from the date of acquisition.
Marketable securities
31 Dec 
2025
31 Dec 
2024
Bank acceptance drafts 1 —
Total 1 —
Cash and cash equivalents
31 Dec 
2025
31 Dec 
2024
Cash at banks 26,002 39,802
Time deposits in banks 29,939 16,509
Equity repurchase agreements 1,623 —
Bank acceptance drafts — 62
Total 57,564 56,373
Cash	and	cash	equivalents	includes	SEK	 3,329	(3,706)	m	where	
	limitations	exist,	mainly	liquid	funds	held	in	certain	countries	where	
exchange	controls	or	other	legal	restrictions	apply.	It	is	not	possible	
to	immediately	use	the	liquid	funds	in	other	parts	of	Volvo	Cars,	
however there is normally no limitation for their use in the Group’s 
operation in the respective country.
For	information	on	financial	instrument	categories	and	fair	values	
see	Note	19	–		Financial	instruments	and	financial	risks.
Month Year Event
Change in number 
of shares
Total number of 
shares
Quota value per 
share, SEK
Change in share 
capital, SEK
Total share capital,  
SEK
01 2024 At the beginning of the year — 2,979,524,179 0.02 — 60,947,709
04 2024 Share split (2:1) 2,979,524,179 5,959,048,358 0.01 — 60,947,709
05 2024 Redemption of redemption shares –2,979,524,179 2,979,524,179 0.01 –30,473,855 30,473,855
05 2024 Bonus issue — 2,979,524,179 0.02 30,473,855 60,947,709
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
106

===== SIDA 107 =====

NOTE 22 POST-EMPLOYMENT BENEFITS
ACCOUNTING POLICIES
Pension benefits
Volvo	Car	Group	has	various	schemes	for	post-employment	bene -
fits,	mainly	relating	to	pension	plans.	Other	benefits	can	in	some	
locations include disability, life insurance and health benefits. 
	Pension	plans	are	classified	either	as	defined	contribution	plans	or	
defined	benefit	plans.	Volvo	Car	Group	has	both	defined	contribu -
tion plans and defined benefit plans for qualifying employees in 
some	subsidiaries	and	the	largest	plans	are	in	Sweden	and	Belgium.
Under	a	defined	contribution	plan,	Volvo	Car	Group	pays	fixed	
contributions	into	a	separate	external	legal	entity	and	will	have	no	
legal obligation to pay further contributions if the fund does not hold 
sufficient assets to pay all employee benefits. The contributions are 
recognised	as	employee	benefit	expenses	in	the	income	statement	
when	earned	by	the	employee.	Some	defined	contribution	plans	
combine the promise to make periodic payments with a promise of 
a	guaranteed	minimum	return	on	investments.	Such	plans	are	
accounted for as defined benefit plans.
A defined benefit plan is a pension plan that defines the amount 
of	post-employment	benefits	an	employee	will	receive	upon	retire -
ment, usually dependent on one or more factors such as age, years 
of	service	and	compensation.	For	funded	defined	benefits	plans,	
plan	assets	have	been	separated,	with	the	majority	invested	in	pen -
sion foundations. The net pension provision or asset recognised on 
the balance sheet in respect of defined benefit pension plans is the 
present value of the defined benefit obligation at the balance sheet 
date less the fair value of plan assets. 
The calculation of the present value of defined benefit pension 
obligations	is	performed	according	to	the	Projected	Unit	Credit	
method. The calculation is performed by independent actuaries. 
The present value of the defined benefit obligation is determined by 
discounting the estimated future cash outflows using interest rates 
of	high-quality	corporate	bonds,	or	when	these	are	not	available,	
government bonds that are denominated in the currency in which 
the	benefits	will	be	paid,	and	that	have	terms	to	maturity	approxi -
mating to the terms of the related pension liability. The most impor -
tant actuarial assumptions are stated below. 
Actuarial gains and losses arising from changes in actuarial 
assumptions	and	adjustments	based	on	experience	are	charged	or	
credited to other consolidated comprehensive income in the period 
in	which	they	arise.	Past	service	costs	are	recognised	immediately	in	
the income statement when the settlement occurs. 
The net interest cost is calculated by applying the discount rate to 
the net balance of the defined benefit obligation and the fair value 
of plan assets. 
Termination benefits
Termination benefits are payable when employment is terminated 
by	Volvo	Car	Group	before	the	normal	retirement	date,	or	whenever	
an	employee	accepts	voluntary	redundancy	in	exchange	for	these	
benefits.	Volvo	Cars	recognises	termination	benefits	at	the	earlier	of	
the	following	dates:	(a)	when	Volvo	Cars	can	no	longer	withdraw	the	
offer	of	those	benefits	and	(b)	when	the	entity	recognises	costs	for	
a restructuring that involves payment of termination benefits.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The value of defined benefit obligations is determined through actu -
arial calculations performed by independent actuaries. The calcula -
tions are based on different assumptions and estimates, for instance 
with regards to the discount rate, future salary increases, inflation, 
mortality	rates	and	demographic	conditions.	Changes	in	these	
assumptions	affect	the	calculated	value	of	the	post-employee	
 benefits obligations. The discount rate, which is the most critical 
assumption,	is	based	on	market	return	on	high-quality	corporate	or	
governnent bonds that are denominated in the currency in which the 
benefits will be paid and with maturities corresponding to the 
related pension liability. A decrease in the discount rate increases 
the	present	value	of	post-employee	benefits	obligations	while	an	
increase in the discount rate has the opposite effect. 
Description	of	the	substantial	pension	schemes	within	Volvo	Car	
Group is presented below.
Sweden
In	Sweden,	Volvo	Car	Group	has	seven	defined	benefit	retirement	
plans of which four are funded. The largest plan overall is the  
Swedish	ITP	2	plan	which	is	a	collectively	agreed	pension	plan	for	
white	collar	employees.	ITP	2	is	a	final	salary-based	plan.	Volvo	Car	
Group’s defined benefit plans are secured in three ways: as a provi -
sion on the balance sheet, assets held in separate pension funds or 
The other reserve  consists of the change in fair value of cash flow 
hedging instruments in cases where hedge accounting is applied. 
Retained earnings  comprises net income for the year and preceding 
years	as	well	as	remeasurements	of	post-employment	benefits	and	
equity-settled	share-based	payments	using	treasury	shares.	Treas -
ury	shares	are	purchased	own	shares	intended	for	Volvo	Cars’	Per -
formance	Share	Plans	(PSP)	and	Employee	Share	Matching	Plans	
(ESMP).	The	amount	presented	in	Acquisition	of	treasury	shares	is	
based	on	the	market	value	at	acquisition	date	and	includes	trans -
action costs. The amount presented in Issue of treasury shares is 
based	on	the	fair	value	at	grant	date.	For	more	information,	see		  
Note	9	–	Share-based	remuneration.	
Retained	earnings	also	include	the	effects	of	business	combina -
tions under common control within the Geely group, transaction 
with	non-controlling	interests	and	dividend	to	shareholders.	
Non-controlling interests  mainly refers to the share of equity that 
belongs	to	Zhejiang	Geely	Holding	Group	Co.,	Ltd	without	a	con -
trolling	influence.	Volvo	Car	Group	holds	50	per	cent	of	the	equity	in	
Daqing	Volvo	Car	Manufacturing	Co.,	Ltd	and	Shanghai	Volvo	Car	
Research	and	Development	Co.,	Ltd	and	has	the	decision-making	
power over the operations. In the consolidated financial statements, 
these companies are classified as subsidiaries and fully consoli -
dated	with	a	non-controlling	interest	of	50	per	cent.	
In	July	2025,	Volvo	Car	Corporation	acquired	the	remaining	50	
per	cent	shares	in	Novo	Energy	AB,	resulting	in	divestment	of	
non-controlling	interest	of	SEK	249	m.	For	further	information,	see	
Note 27 – Business combinations and divestments.
In	August	2024,	Volvo	Car	Corporation	acquired	the	remaining	  
40	per	cent	shares	in	HaleyTek	AB	from	ECARX	Technology	Co.,	Ltd,	
resulting	in	divestment	of	non-controlling	interest	of	SEK	 –211 m. 
In	October	2024,	the	non-controlling	interest	increased	through	a	
capital	contribution	to	VCLC	Services	AB	of	SEK	3	m	from	Lynk	&	Co	
International AB. 
At	year	end	2025,	non-controlling	interests	amounted	to	SEK	
1,299	(4,738)	m.	Summarised	financial	information	on	subsidiaries	
with	non-controlling	interest	is	presented	in	Note	8	–	Participation	
in	subsidiaries	(Parent	company).
Total equity consists of the equity attributable to the owners of the 
parent	company	and	non-controlling	interests.	At	year	end	2025,	
the	total	equity	amounted	to	SEK	148,378	(142,199)	m.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
107

===== SIDA 108 =====

funded through insurance payments. The “funded through insur -
ance	payments”	plans	are	defined	benefit	plans	accounted	for	as	
defined	contribution	plans.	In	Sweden,	these	plans	are	secured	with	
the mutual insurance company Alecta. 
The portion secured through insurance with Alecta refers to a 
defined benefit plan that comprises several employers and is 
reported	according	to	a	pronouncement	by	the	Swedish	Corporate	
Reporting	Board,	UFR	10.	For	2025,	Volvo	Car	Group	did	not	have	
access to the information to report its proportionate share of the 
plan's	obligations,	assets	under	management	and	cost,	that	would	
make	it	possible	to	report	this	plan	as	a	defined	benefit	plan.	Volvo	
Cars	estimates	payments	of	premiums	of	about	SEK	172	m	to	Alecta	
in	2026.	Volvo	Car	Group's	share	of	the	total	saving	premiums	for	
ITP2	in	Alecta	as	at	31	December	2025	amounted	to	0.48	(0.41)	
per	cent	and	Volvo	Car	Group's	share	of	the	total	number	of	active	
policy	holders	amounted	to	1.43	(1.40)	per	cent.
The collective consolidation level comprises the market value of 
Alecta's	assets	as	a	percentage	of	the	insurance	obligations	calcu -
lated	in	accordance	with	Alecta's	actuarial	methods	and	assump -
tions,	which	do	not	conform	to	IAS	19.	The	collective	funding	ratio	is	
normally allowed to vary between 125 and 175 per cent. If the con -
solidation	level	falls	short	or	exceeds	the	normal	interval	one	meas -
ure may be to increase the contract price for new subscriptions and 
expanding	existing	benefits	or	introduce	premium	reductions.	  
At	year	end	2025,	the	consolidation	level	amounted	to	168	(162)	
per cent. 
In	case	local	legal	requirements	exist,	funded	or	unfunded	plans	
are	credit	insured	with	an	external	party.	
Belgium
In	Belgium,	Volvo	Car	Group	has	three	retirement	−	indemnity	plans	
which	are	all	funded.	All	three	are	based	on	the	Collective	Labour	
Agreement applicable to the company. The pension plan for white 
collar employees and the closed plan for blue collar employees who 
were in service before 2009 are defined benefit plans. The benefits 
are based on the final salary and seniority within the company. The 
pension plan for blue collars who are in service as from 2009 is a 
cash balance plan. The pension obligations are secured through a 
transfer of the required funds to a separate pension fund. The fund -
ing of the obligations under these defined benefit and cash balance 
plans	is	fully	externalised	through	a	number	of	pension	funds	and	
through insurance contracts. 
Total of which Sweden of which Belgium Total of which Sweden of which Belgium
Financial year ending on 31 Dec 2025 31 Dec 2025 31 Dec 2025 31 Dec 2024 31 Dec 2024 31 Dec 2024
Amounts recognised in the statement of 
 financial position
Defined benefit obligation 24,559 18,179 3,891 26,921 19,865 4,210
Fair value of plan assets 18,706 13,302 3,564 18,810 12,907 3,837
Funded status 5,853 4,877 327 8,111 6,958 373
Net provision (asset) as recorded on the  
balance sheets 5,853 4,877 327 8,111 6,958 373
Principal actuarial assumptions
Weighted average assumptions to determine 
 benefit obligations
Discount rate, % 4.08 3.95 4.05 3.67 3.55 3.39
Rate of salary increase, % 3.11 3.15 2.94 3.35 3.40 3.15
Rate of price inflation, % 1.86 1.75 2.00 2.06 2.00 2.00
Rate of pension indexation, % 1.83 1.75 N/A 2.06 2.00 N/A
The actuarial assumptions are the most significant assumptions 
applied when calculating the value of a defined benefit pension 
plan.	Volvo	Car	Group	determines	the	discount	rate	based	on	
AA-rated	corporate	bonds	and	mortgage	bonds	that	match	the	
duration of the obligations. If no such corporate bonds and mort -
gage	bonds	are	available,	government	bonds	are	used.	In	Sweden,	  
as in prior years, mortgage bonds are used. 
Inflation assumptions are based on a combination of central banks 
targets,	implicit	market	expectations	and	long-term	analyst	forecasts.	
Assumptions regarding future mortality are set based on actuarial 
advice	in	accordance	with	published	statistics	and	experience	in	
each	territory.	Mortality	assumptions	for	Sweden	are	based	on	the	
DUS23	(white	collar)	mortality	study,	and	the	DUS23	(white	collar)	
mortality table is generational. Mortality assumptions in Belgium 
are not as significant, since there are lump sum payments. 
The	actuarial	assumptions	are	reviewed	annually	by	Volvo	Car	
Group and modified when deemed appropriate to do so.
In	Belgium,	Volvo	Car	Group	also	has	early	retirement	arrangements	
(termination	benefits	−	bridge	plans)	as	well	as	seniority		 premiums	
(other	long-term	benefits).	The	early	retirement	arrangements	are	
unfunded and the seniority premiums are funded. 
Summary of provision for post-employment benefits
The	provisions	for	post-employment	benefits	have	been	recognised	
on the balance sheet as follows: 
31 Dec 
2025
31 Dec 
2024
Post-employment benefits 5,853 8,111
Other provisions (Note 23) 367 363
Closing balance 6,220 8,474
The	tables	below	show	Volvo	Car	Group's	provision	for	post-
employment benefits, the assumptions used to calculate the value 
of these provisions and the plan assets related to these provisions, 
as	well	as	the	amounts	recognised	in	the	income	statement.	Volvo	
Car	Group's	reported	pension	provision	amounts	to	SEK	6,220	
(8,474)	m	in	total,	which	includes	endowment	insurances	and	similar	
undertakings	amounting	to	SEK	367	(363)	m	in	respect	of	defined	
premium	pension	plans	in	Sweden.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
108

===== SIDA 109 =====

Total of which Sweden of which Belgium Total of which Sweden of which Belgium
Financial year ending on 31 Dec 2025 31 Dec 2025 31 Dec 2025 31 Dec 2024 31 Dec 2024 31 Dec 2024
Change in defined benefit obligation
Defined benefit obligation at end of prior year 26,921 19,865 4,210 25,116 18,220 4,092
Service cost 838 646 150 636 438 154
Interest expense 949 697 128 880 621 135
Cash flows –1,030 –492 –377 –951 –458 –361
Remeasurements –2,597 –2,537 10 944 1,044 72
Effect of changes in foreign exchange rates –522 — –230 296 — 118
Defined benefit obligation at end of year 24,559 18,179 3,891 26,921 19,865 4,210
Change in fair value of plan assets
Fair value of plan assets at end of prior year 18,810 12,907 3,837 17,506 11,918 3,594
Interest income 681 458 121 630 411 123
Cash flows –195 — –107 –185 — –109
Remeasurements –137 –63 –77 598 578 124
Effect of changes in foreign exchange rates –453 — –210 261 — 105
Fair value of plan assets at end of year 18,706 13,302 3,564 18,810 12,907 3,837
Components of defined pension cost
Service cost 838 646 150 636 438 154
Net interest cost 269 238 6 250 210 12
Remeasurements of Other long-term benefits –55 — –56 43 — 42
Administrative expenses and taxes 35 — 31 36 — 32
Total pension cost  
for defined benefit plans 1,087 884 131 965 648 240
Pension cost for defined contribution plans 4,600 3,809 385 4,348 3,489 381
Total pension cost recognised in P&L 5,687 4,693 516 5,313 4,137 621
Remeasurements 
(recognised in other  comprehensive income) –2,403 –2,474 144 312 466 –96
 Effect of changes in demographic assumptions 518 — 515 –33 — —
 Effect of changes in financial assumptions –2,840 –2,346 –411 –475 –377 31
 Effect of experience adjustments –220 –191 –38 1,409 1,421 –2
 Return on plan assets (excluding interest income) 139 63 78 –589 –578 –125
Total defined benefit cost  
recognised in P&L and OCI –1,316 –1,590 275 1,277 1,114 144
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
109

===== SIDA 110 =====

Total of which Sweden of which Belgium Total of which Sweden of which Belgium
Financial year ending on 31 Dec 2025 31 Dec 2025 31 Dec 2025 31 Dec 2024 31 Dec 2024 31 Dec 2024
Net defined benefit provision (asset)   
 reconciliation
Net defined benefit provision (asset) 8,111 6,958 373 7,610 6,302 498
Defined benefit cost included in 
the income statement 1,087 884 131 965 648 240
Total remeasurements included in OCI –2,403 –2,474 144 312 466 –96
Cash flows –872 –491 –301 –810 –458 –283
 Employer contributions –306 — –274 –290 — –260
 Employer direct benefit payments –566 –491 –27 –520 –458 –23
Effect of changes in foreign exchange rates –70 — –20 34 — 14
Net defined benefit provision (asset)  
as of end of year 5,853 4,877 327 8,111 6,958 373
Defined benefit obligation by participant 
status
Actives 12,340 8,558 3,211 13,834 9,784 3,378
Vested deferreds 5,430 4,078 580 6,018 4,500 643
Retirees 6,789 5,543 100 7,069 5,581 189
Total 24,559 18,179 3,891 26,921 19,865 4,210
Plan assets of which with a quoted  
market price
Fair value  
of plan assets 2025 2024 2025 2024
Cash and cash 
 equivalents 368 469 359 325
Equity instruments 1,022 1,698 945 1,109
Debt instruments 5,834 8,093 4,938 7,291
Real estate 1,202 828 84 86
Investment funds 8,258 5,725 6,876 5,565
Other 2,022 1,997 38 219
Total 18,706 18,810 13,240 14,595
Responsibility	for	the	management	of	several	pension	plans	rest	
with	Volvo	Car	Group	and	therefore	pension	trusts	have	been	set	up	
in	different	countries.	The	assets	are	held	by	long-term	employee	
benefit	trusts	that	are	legally	separated	from	Volvo	Car	Group.
The	assets	are	available	to	fund	employee	benefits	only.	Sweden,	
Belgium	and	United	Kingdom	have	the	largest	pension	trusts.	  
The assets of the pension trusts are managed in accordance with a  
capital	preservation	strategy	where	the	risk	exposure	is	adjusted	
accordingly.	The	investment	strategies	are	long-term	and	the	  
distribution of assets ensures that investment portfolios are well 
diversified. The capital is managed in accordance with the invest -
ment	policies	of	each	pension	trust.	Continuous	monitoring	is	  
performed by the trustees to ensure that capital is allocated and 
managed	according	to	the	investment	policies.	In	Sweden	the	  
minimum	funding	level	is	decided	by	PRI	Pensionsgaranti.	
The	actual	return	on	plan	assets	amounts	to	SEK	543	(1,228)	m.
Risks 
There are mainly three categories of risks related to defined benefit 
obligations and pension plans. The first category relates to risks 
affecting the actual pension payments. Increased longevity and 
inflation of salary and pensions are the principal risks that may 
increase the future pension payments and hence, increase the pen -
sion obligation. The second category relates to investment return. 
Pension	plan	assets	are	invested	in	a	variety	of	financial	instruments	
and	are	exposed	to	market	fluctuations.	Poor	investment	return	may	
reduce the value of investments and render them insufficient to 
cover future pension payments. The final category relates to the 
discount rate used for measuring the obligation and the plan assets. 
The discount rate used for measuring the present value of the obli -
gation may fluctuate which impacts the valuation of the defined 
benefit obligation. The discount rate also impacts the value of the 
interest	income	and	expense	that	is	reported	in	the	financial	items	
and the service cost. The risk related to pension obligations, i.e. 
mortality	exposure,	discount	rate	and	inflation,	are	monitored	on	
an ongoing basis. 
Sensitivity analysis on defined benefit obligation Sweden Belgium
Discount rate +0.5% –1,612 –142
Discount rate –0.5% 1,803 158
Inflation rate +0.5 % 1,825 140
Inflation rate –0.5% –1,639 –129
The weighted average duration of the obligation is 19.5 years for 
	Sweden	and	8.0	years	for	Belgium.	
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
110

===== SIDA 111 =====

NOTE 23 CURRENT AND OTHER NON–CURRENT  
PROVISIONS
ACCOUNTING POLICIES
Provisions
Provisions	are	recognised	on	the	balance	sheet	when	a	legal	or	con -
structive	obligation	exists	as	a	result	of	a	past	event,	it	is	deemed	
more likely than not that an outflow of resources will be required 
to settle the obligation and the amount can be reliably estimated. 
Provisions	are	typically	settled	within	2–3	years.	
Warranties
Warranty	provisions	include	Volvo	Car	Group’s	cost	of	satisfying	the	
customers with specific contractual warranties, as well as other 
costs not covered by standard contractual commitments. All war -
ranty provisions are recognised at the sale of the vehicles or spare 
parts. The initial calculations of the reserves are based on historical 
warranty statistics considering known quality improvements, costs 
for remedy of defaults etc. The warranty provision booked at point 
of	sale	is	adjusted	as	campaign	decisions	for	specific	quality	prob -
lems	are	made.	On	a	quarterly	basis	the	provisions	are	adjusted	to	
reflect	latest	available	data	such	as	actual	spend,	exchange	rates,	
discount rates etc. The provisions are reduced by virtually certain 
warranty reimbursements from suppliers. Generally, warranty provi -
sions are settled within 2–4 years, provisions for battery warranties 
are typically settled within 8 years. 
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Provisions
The amount recognised as provision is the best estimate of the 
expenditure	required	to	settle	the	present	obligation	at	the	balance	
sheet	date.	Provisions	are	regularly	reviewed	and	adjusted	as	further	
information becomes available or circumstances change. If the 
effect	of	the	time	value	of	money	is	material,	non-current	provisions	
are	recognised	at	present	value	by	discounting	the	expected	future	
cash	flows	at	a	pre-tax	rate	reflecting	current	market	assessments	
of the time value of money. The discount rate does not reflect such 
risks that are taken into consideration in the estimated future cash 
flow.	Revisions	of	estimated	cash	flows,	both	amount	and	likelihood,	
are recognised as operating cost. 
Warranties Other	provisions 1) Total
Balance at 1 January 2024 11,122 9,577 20,699
Provided for during the year 14,185 12,739 26,924
Utilised during the year –10,390 –13,740 –24,130
Reversal of unutilised amounts –3,154 –61 –3,215
Translation differences 452 150 602
Balance at 31 December 2024 12,215 8,665 20,880
Of which current 3,865 7,514 11,379
Of which non-current 8,350 1,151 9,501
Warranties Other	provisions 1) Total
Balance at 1 January 2025 12,215 8,665 20,880
Provided for during the year 14,771 17,385 32,156
Utilised during the year –10,886 –17,948 –28,834
Reversal of unutilised amounts –4,220 –1,485 –5,705
Translation differences –1,268 –345 –1,613
Balance at 31 December 2025 10,612 6,272 16,884
Of which current 3,215 5,141 8,356
Of which non-current 7,397 1,131 8,528
1)  Other provisions include personnel related provisions of SEK 746 (2,650) m. 
Changes	to	present	value	due	to	the	passage	of	time	and	revisions	
of discount rates to reflect prevailing current market conditions are 
recognised as a financial cost. 
There is always a risk for changing governmental regulations and 
changes in environmental policies affecting our business as well as 
accounting	estimates	and	judgements	related	to	climate	regulation.	
Based on our performance to date, current product and volume 
plans	and	current	knowledge	of	global	emissions	regulations,	Volvo	
Car	Group	does	not	foresee	any	significant	financial	risks	or	judg -
mental	accounting	issues	short	to	mid-term	related	to	not	meeting	
global,	regional	or	national	CO 2 emissions regulations.
Warranties 
The recognition and measurement of provisions for product warran -
ties	is	generally	connected	with	estimates.	Estimated	costs	for	
product warranties are charged to cost of sales when the products 
are	sold.	Estimated	warranty	costs	include	contractual	warranty,	
warranty	campaigns	(recalls	and	buy-backs)	and	coverage	in	excess	
of contractual warranty or campaigns, which is accepted as a matter 
of policy or normal practice in order to maintain a good business 
relation with the customer. Warranty provisions are estimated based 
on	historical	claims	statistics	and	the	warranty	period.	Quality	index	
improvements based on historical patterns have been reflected in 
all	categories	of	warranty.	Refunds	from	suppliers	that	decrease	
Volvo	Car	Group’s	warranty	costs	are	recognised	to	the	extent	these	
are	considered	to	be	virtually	certain,	based	on	historical	experi -
ence.	Supplier	recovery	provisions	amount	to	SEK	2,523	(2,453)	m,	
excluding	supplier	recovery	related	to	EX30	battery	cells.  
EX30 recall 
On	30	December	2025,	Volvo	Cars	issued	a	precautionary	safety	
notice	relating	to	a	potential	issue	in	certain	EX30	battery	cells.	At	
the end of the year and at the date of the release of the interim 
report for the fourth quarter, the assessment of affected vehicles, 
the appropriate remediation measures and the related cost implica -
tions was still ongoing. Due to these uncertainties, it was not possi -
ble to make a reliable estimate of any potential obligation or any 
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
111

===== SIDA 112 =====

NOTE 24 OTHER CURRENT AND NON-CURRENT  
LIABILITIES
Other non–current liabilities
31 Dec
2025
31 Dec
2024
Liabilities related to repurchase commitments 3,113 3,107
Other liabilities 3,601 2,191
Total 6,714 5,298
Other current liabilities
31 Dec 
2025
31 Dec 
2024
Accrued expenses and prepaid income 19,645 23,110
Liabilities related to repurchase commitments 15,367 14,134
Personnel related liabilities 5,946 7,154
VAT liabilities 3,364 5,172
Other liabilities 3,745 3,750
Total 48,067 53,320
NOTE 25 CONTINGENT LIABILITIES AND  
PLEDGED ASSETS
ACCOUNTING POLICIES
When a possible obligation does not meet the criteria for recogni -
tion as a liability it may be disclosed as a contingent liability. These 
possible	obligations	derive	from	past	events	and	their	existence	will	
be confirmed only when one or several uncertain future events, 
which	are	not	entirely	within	Volvo	Car	Group’s	control,	take	place	or	
fail	to	take	place.	A	contingent	liability	could	also	exist	for	a	present	
obligation, due to a past event, where an outflow of resources is less 
likely	(<50	per	cent)	or	when	the	amount	of	the	obligation	cannot	be	
reliably measured.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Legal proceedings
Companies	within	Volvo	Car	Group	may	at	times	be	involved	in	legal	
proceedings, such proceedings may cover a range of different mat -
ters	in	various	jurisdictions.	These	include,	but	are	not	limited	to,	
commercial disputes such as alleged breach of contract, insufficient 
supplies of goods or services, product liability, patent infringement 
or infringement of other intangible rights. The various matters 
raised	are	often	of	a	difficult	and	complex	nature	making	them	
legally complicated, and it is therefore difficult to predict the final 
outcome	of	such	matters.	The	companies	within	Volvo	Car	Group	
work	closely	with	legal	advisors	and	other	experts	in	the	various	
matters	in	each	jurisdiction.	A	provision	is	made	when	it	is	deter -
mined that an adverse outcome is more likely than not, and the 
amount of the loss can be reliably estimated. In instances where 
these criteria are not met, a contingent liability has been disclosed 
provided the risk qualifies as such a liability. 
Other processes 
Volvo	Car	Group	is	as	well,	like	other	global	companies,	from	time	to	
time involved in processes of varying scope and in various stages 
with regards to for instance import duties and transfer prices. These 
processes are evaluated regularly, and provisions are made when it 
is more likely than not that additional fees must be paid, and the 
outcome can be reliably estimated. If it is not probable that the 
additional fees will be paid but the risk is more than remote, such 
amounts are disclosed as contingent liabilities. 
Contingent liabilities
31 Dec 
2025
31 Dec 
2024
Guarantees to insurance company FPG 291 278
Legal claims 50 19
Other claims 1) 289 231
Guarantee commitments 9 9
Other contingent liabilities 2)3) 143 3,433
Total 782 3,970
1)  In addition to the contingent liabilities related to other claims there is 
also tax related contingent assets amounting to SEK —  (54 ) m.
2)  On 19 November 2024, Volvo Cars entered into an operational agree -
ment that included a purchase option for an entity domiciled in the 
UK. This purchase option expired on August 31, 2025. Subsequently, 
on 20 November 2024, Volvo Cars entered into a related agreement 
guaranteeing the outstanding loans of the target entity. This guaran -
tee was contingent upon the lenders electing to transfer these loans 
to Volvo Cars. The maximum exposure under this financial guarantee 
was estimated to SEK 3,240 m. On 25 April 2025, Volvo Cars exer -
cised its purchase option and made a payment of SEK 2,727 m under 
the financial guarantee arrangement relating to the loans of the UK 
entity it acquired. Volvo Cars has no contingent liabilities or other  
liabilities outstanding as at reporting date. 
3)  Apart from the above contingent liabilities, there are other commit -
ments and guarantees that are not recognised since the likelihood of 
an outflow of resources is very low. 
Pledged assets
31 Dec 
2025
31 Dec 
2024
Restricted cash 42 195
Inventory 374 439
Floating charges 54 72
Other pledged assets 904 486
Total 1,374 1,192
NOTE 26 CASH FLOW STATEMENTS
2025 2024
Adjustments for other non-cash items:
Capital gains/losses on sale of tangible and 
 intangible assets 6,518 1,574
Share of income in joint ventures and  
associates –654 4,722
Interest effect from the measurement of 
 repurchase obligations –132 –797
Provision for variable pay 102 2,163
Other provisions 6,968 –695
Deferred revenue –3,570 –1,779
Reclassification of residual value guarantee –693 –1,364
Inventory impairment 766 549
Elimination of intra-group profit –493 –186
IFRS16 adjustments –5,807 –1,450
Negative goodwill of NOVO Energy AB — –1,054
Other non-cash items 3,276 1,071
Total 6,281 2,754
related	supplier	recovery	receivable.	Consequently,	Volvo	Cars	did	
not recognise any provision or supplier recovery receivable as of 
year-end.
As the investigation progressed during 2026 and additional 
 information became available before finalising this annual report, 
management	was	able	to	determine	the	expected	remediation	
actions.	The	estimated	costs	are	still	subject	to	final	assessment	  
but	are	expected	to	be	fully	recovered	from	the	supplier.	
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
112

===== SIDA 113 =====

Cash	flows Non-cash	changes
Change in net cash
1 Jan 
2024
Reclassifi-
cations
Foreign
exchange
movement
Fair	value
changes
Other
non-cash
changes
31 Dec 
2024
Cash and cash equivalents  47,861 7,043 — 1,469 — — 56,373
Marketable securities  9,918 –10,269 — 351 — — —
Liabilities to credit institutions, non-current –4,562 –199 947 –122 — 51 –3,885
Bonds, non-current 1) –18,121 –5,857 5,618 –246 — 16 –18,590
Bonds, current 1) –6,672 6,935 –5,618 –367 — –1 –5,723
Other interest-bearing non-current liabilities — — — — — — —
Liabilities to credit institutions, current –937 862 –947 –41 — 3 –1,060
Net cash 27,487 –1,485 — 1,044 — 69 27,115
Change in net cash
1 Jan 
2025
31 Dec 
2025
Cash and cash equivalents  56,373 4,177 — –2,986 — — 57,564
Marketable securities — 1 — — — — 1
Liabilities to credit institutions, non-current –3,885 –4,947 761 1,350 — –2 –6,723
Bonds, non-current 1) –18,590 –5,476 1,500 1,013 — 4 –21,549
Bonds, current 1) –5,723 5,732 –1,500 –8 — –1 –1,500
Other interest-bearing non-current liabilities — — — — — — —
Liabilities to credit institutions, current –1,060 1,631 –761 –732 — — –922
Net cash 27,115 1,118 — –1,363 — 1 26,871
1)  The bonds are presented above at amortised cost. The fair value risk of the EUR-denominated bonds is hedged, and the bonds with fixed interest pay -
ments have been swapped into floating interest payments. Consequently, a portion of the bonds is therefore measured at fair value through the income 
statement, while the remaining part is measured at amortised cost. On 31 December 2025, the fair value component amounted to SEK 96 (235) m.
NOTE 27 BUSINESS COMBINATIONS AND  
DIVESTMENTS
ACCOUNTING POLICIES
Acquisitions
Companies	are	consolidated	as	of	the	date	of	acquisition	when	
Volvo	Car	Group	obtains	control.	In	a	business	combination	Volvo	
Car	Group	measures	all	acquired	identifiable	assets	and	liabilities	at	
fair value. Any surplus amount from the purchase consideration, 
possible	non-controlling	interest	and	fair	value	of	previously	held	
equity	interests	at	the	acquisition	date	compared	to	Volvo	Car	
Group’s share of acquired net assets is recognised as goodwill. 
Any	deficit	amount	(i.e.	negative	goodwill)	resulting	from	a	bargain	
purchase, is recognised directly as a gain in the income statement. 
In step acquisitions, a business combination occurs only on the date 
control	is	achieved.	Transactions	with	non-controlling	interest	are	
recognised within equity as long as control of the subsidiary is 
retained. 
In	acquisitions	that	involve	parties	under	common	control	Volvo	
Car	Group	applies	predecessor	accounting,	meaning	that	the	
acquirer consolidates the predecessors’ respective carrying values 
for assets and liabilities. These are the carrying values that are 
related to the acquired entity from the consolidated financial state -
ments of the highest entity that has common control, and for which 
consolidated financial statements are prepared. Any difference 
between	the	cost	of	the	combination	(i.e.	the	fair	value	of	the	con -
sideration	paid)	and	the	carrying	values	for	assets	and	liabilities	is	
recognised directly in equity within retained earnings. 
All	acquisition-related	transaction	costs	are	expensed.
Divestments
Companies	that	have	been	divested	are	included	in	the	consolidated	
financial	statements	up	to	and	including	the	date	when	Volvo	Car	
Group loses control. 
In divestments that involve parties under common control, any 
difference	between	the	cost	of	the	divestment	(i.e.	the	fair	value	of	
the	consideration	received)	and	the	carrying	values	for	assets	and	
liabilities is recognised directly in equity within retained earnings.
Business combinations 
NOVO Energy AB
On	30	October	2024,	Volvo	Car	Corporation	assessed	it	had	gained	
control	of	NOVO	Energy	AB	from	an	accounting	perspective	follow -
ing	the	notification	to	Northvolt	AB	of	Volvo	Cars	intent	to	redeem	
Northvolt	AB’s	50	per	cent	shareholdings	in	NOVO	Energy	AB.	
On	4	July	2025,	Volvo	Car	Corporation	finalised	the	acquisition	of	
Northvolt	AB’s	shares	in	NOVO	Energy	AB	and	became	100%	share -
holder	of	NOVO	Energy	AB.	As	a	consequence,	the	non-controlling	
interest	of	50	per	cent	ceased.	Purchase	consideration	amounted	to	
SEK	40	m.	The	preliminary	acquisition	analysis	previously	recog -
nised	for	NOVO	Energy	AB	was	adopted	in	2025.	
Apart	from	the	parent	company	NOVO	Energy	AB,	NOVO	Energy	
Group	consists	of	the	wholly-owned	subsidiaries	NOVO	Energy	R&D	
AB	and	NOVO	Energy	Production	AB	with	its	wholly-owned	subsidi -
ary	NOVO	Energy	PropCo	AB.	
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
113

===== SIDA 114 =====

NOTE 28 SEGMENT REPORTING
ACCOUNTING POLICIES
Volvo	Car	Group	is	considered	to	have	one	operating	segment.	
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Critical	judgements	in	the	determination	of	Volvo	Car	Group	having	
one operating segment relates to the level of integration across the 
different	functions	of	the	Group,	the	identification	of	the	Chief	
operating	decision-making	body	and	how	resources	are	allocated.	
The activities that the automotive business engage in relates to 
development, design, manufacturing, assembly and sale of vehicles, 
as	well	as	sale	of	related	parts	and	accessories	from	which	Volvo	
Cars	derives	its	revenues.	All	of	the	activities	of	the	Group	are	not	
managed individually but globally on a highly integrated basis. 
Volvo	Car	Group	is	managed	by	the	Executive	Management	Team	
(EMT)	with	8	(8)	members,	led	by	the	CEO	and	overseen	by	the	
Board	of	Directors.	EMT	take	all	significant	operating	decisions	and	
members	of	EMT	have	the	responsibility	for	implementing	the	deci -
sions	in	their	respective	areas.	The	operating	decision-making	is	at	
EMT	level	as	a	whole,	however	Volvo	Car	Group	considers	the	CEO	
to	the	be	Chief	operating	decision	maker	as	the	CEO	has	the	ability	
to	override	decisions	made	by	the	EMT.	All	substantial	decisions	
regarding allocation of resources as well as the assessment of per -
formance	is	based	on	Volvo	Car	Group	as	a	whole.	Therefore,	Volvo	
Car	Group	is	considered	to	have	only	one	operating	segment.
Sweden China
Rest	of	 
the world Total
31 Dec 2025
Non-current assets 1) 141,780 17,195 34,601 193,576
31 Dec 2024
Non-current assets 1) 135,885 23,861 44,419 204,165
1) Excluding deferred tax assets and financial instruments.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
114

===== SIDA 115 =====

Gross margin
Gross margin is defined as gross income as a percentage of revenue. 
Gross	margin	presents	the	per	cent	of	revenue	that	Volvo	Cars	
retains after incurring the direct costs associated with producing 
the goods and services sold. 
Gross margin excl. items affecting comparability
Gross	margin	excl.	items	affecting	comparability	is	defined	as	gross	
margin	adjusted	for	items	affecting	comparability.	This	presents	the	
per	cent	of	revenue	that	Volvo	Cars	retains	from	the	underlying	
operations after incurring the direct costs associated with produc -
ing the goods and services sold.
Items affecting comparability
Transactions that are not related to recurring business operations, 
but affecting the financial outcome in a material way, and where the 
probability of reoccurrence over the coming years is limited.
EBIT
EBIT	is	defined	as	net	income	excluding	financial	income,	financial	
expenses	and	Income	taxes,	that	is	operating	income	presented	in	
the	income	statement.	EBIT	presents	the	operating	income	of	Volvo
Car	Group.	
EBIT margin
EBIT	margin	is	defined	as	EBIT	as	a	percentage	of	revenue.	The	EBIT	
margin presents the profitability of the operation in relation to the 
recognised	revenue	earned	by	Volvo	Car	Group	during	the	account -
ing period. 
EBIT excl. share of income in JVs & associates
EBIT	excl.	share	of	income	in	JVs	&	associates	is	defined	as	EBIT	less	
the	result	from	share	of	income	in	JVs	&	associates.	This	presents	
the	profitability	of	the	operation	excluding	share	of	income	in	JVs	&	
associates during the accounting period.
EBIT excl. items affecting comparability
EBIT	excl.	items	affecting	comparability	is	defined	as	EBIT	adjusted	
for items affecting comparability. This presents the profitability of 
the underlying operations that can be used in making comparisons 
between reporting periods.
EBIT margin excl. share of income from JVs & 
 associates
EBIT	margin	excl.	share	of	income	in	JVs	&	associates	is	also	pre -
sented as a percentage of revenue. The margin presents the profita -
bility	of	the	operation	excluding	share	of	income	in	JVs	&	associates
in	relation	to	the	recognised	revenue	earned	by	Volvo	Car	Group	
 during the accounting period.
EBIT margin excl. items affecting comparability
EBIT	margin	excl.	items	affecting	comparability	is	defined	as	EBIT	
excl.	items	affecting	comparability	as	a	percentage	of	revenue.	
The	EBIT	margin	excl.	items	affecting	comparability	presents	the	
profitability of the underlying operation in relation to the recognised 
revenue	earned	by	Volvo	Car	Group	during	the	accounting	period	
and can be used in making comparisons between reporting periods.
The	alternative	performance	measures	presented	and	disclosed	in	this	annual	report	are	used	internally	by	management	in	conjunction	with	IFRS	measures	to	measure	performance	and	make	decisions	
regarding	the	future	direction	of	the	business.	The	Group	believes	that	these	alternative	performance	measures,	when	provided	in	combination	with	reported	IFRS	measures,	provide	helpful	supplementary	
information	for	investors.	These	alternative	performance	measures	are	not	a	substitute	for	or	superior	to	IFRS	measures	and	should	be	used	in	conjunction	with	reported	IFRS	measures.	Further,	these	
alternative	performance	measures,	as	defined	by	the	Group,	may	not	be	comparable	to	other	similarly	titled	measures	used	by	other	groups.	For	general	definitions,	see	page	226.
Volvo	Cars	has	applied	the	guidelines	from	ESMA	(European	Securities	and	Markets	Authority)	regarding	alternative	key	figures	(APMs,	Alternative	performance	measures).	Although	these	key	figures	
are	not	defined	or	specified	according	to	IFRS	they	provide	the	valuable	supplementary	information	to	investors	and	the	company’s	management	regarding	the	company’s	performance.
Alternative performance measures presented by Volvo Car Group
EBITDA
EBITDA	is	defined	as	EBIT	excluding	depreciation,	amortisation	and	
impairment	of	non-current	assets.	EBITDA	presents	an	overview	of	
the	profitability	of	Volvo	Car	Group	operations.	
EBITDA margin
EBITDA	margin	is	EBITDA	as	a	percentage	of	revenue.	The	EBITDA	
margin presents the profitability of the operation in relation to the 
 recognised revenue earned by the Group during the accounting 
period. 
Free cash flow
Free	cash	flow	is	defined	as	the	sum	of	cash	flow	from	operating	
activities and cash flow from investing activities. This represents 
the	operational	cash	flow	for	Volvo	Cars	minus	the	total	investment	
spend	and	is	the	amount	that	Volvo	Cars	can	choose	to	either	
 consolidate, pay down debt or distribute to the shareholders.
Return on invested capital, ROIC
ROIC	is	defined	as	EBIT	divided	by	invested	capital.	Return	on	
invested	capital	ratio	gives	an	overview	of	how	efficient	Volvo	Car	
Group is at allocating capital to profitable investments. Invested  
capital is the amount of net assets needed in day to day operations 
(total	assets	less	receivables	on	parent	company	less	other	long-
term securities holding less cash and cash equivalents less  
marketable	securities	plus	operating	cash	(average	two-year	  
revenue*10%)	less	total	current	liabilities	less	current	liabilities	to	
parent	company	plus	total	current	interest-bearing	liabilities	
(including	liabilities	to	credit	institutions,	bonds	current,	other	
	current	interest-bearing	liabilities)	calculated	on	two-year	average	
figures.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
115 VOLVO CAR GROUP  / FINANCIALS / ALTERNATIVE 	PERFORMANCE 	MEASURES

===== SIDA 116 =====

Equity ratio
The equity ratio is defined as total equity divided by total assets on 
the	balance	sheet.	This	measures	the	Volvo	Car	Group’s	long-term	
solvency and financial leverage level. 
Net cash
Net cash is defined as cash, cash equivalents and marketable  
securities less liabilities to credit institutions and bonds. Net cash 
represents	Volvo	Car	Group’s	ability	to	meet	its	financial	obligations.	
Liquidity
Liquidity	is	defined	as	cash,	cash	equivalents,	undrawn	credit	  
facilities and marketable securities.
Invested capital 
Invested capital is defined as total assets less receivables from 
	parent	company,	other	long-term	security	holdings,	cash	and	cash	
equivalents, marketable securities, operating cash, total current 
 liabilities, current liabilities to parent company and total current 
interest-bearing	liabilities.	It	is	calculated	using	a	two-year	average.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
116 VOLVO CAR GROUP  / FINANCIALS / ALTERNATIVE 	PERFORMANCE 	MEASURES

===== SIDA 117 =====

RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
2025 2024
Revenue 357,263 400,234
Cost of sales –297,042 –320,821
Research and development expenses –26,067 –16,983
Operating income, EBIT 303 22,318
EBIT margin, excl. share of income from JVs & associates –351 27,040
EBIT excl. Items affecting comparability 12,556 24,020
Net income –2,968 15,934
EBITDA 35,679 45,048
Gross margin, % 16.9 19.8
Gross margin, excl. Items affecting comparability, % 18.0 19.8
EBIT margin, % 0.1 5.6
EBIT margin, excl. share of income from JVs & associates, % –0.1 6.8
EBIT margin excl. Items affecting comparability, % 3.5 6.0
EBITDA margin, % 10.0 11.3
Equity ratio, % 39.8 36.6
Net cash 26,871 27,115
Return on invested capital, ROIC % 0.2 12.0
Operating income, EBIT/EBIT margin, % 2025 2024
Operating income, EBIT 303 22,318
Revenue 357,263 400,234
EBIT margin, % 0.1 5.6
EBIT and EBIT margin, excl. share of income from JVs & associates, % 2025 2024
Operating income, EBIT 303 22,318
Share of income from JVs & associates 654 –4,722
EBIT excl. share of income from JVs & associates –351 27,040
Revenue 357,263 400,234
EBIT margin, excl. share of income from JVs & associates, % –0.1 6.8
EBIT and EBIT margin excl. Items affecting  
comparability, % 2025 2024
Operating income, EBIT 303 22,318
Impairment charge for the EX90 and ES90 platform 11,431 —
Restructuring costs 822 —
Impairment of JV-shareholding in NOVO Energy AB — 1,702
EBIT, excl. Items affecting comparability  12,556 24,020
Revenue 357,263 400,234
EBIT margin, excl. Items affecting comparability, % 3.5 6.0
EBITDA/EBITDA margin, % 2025 2024
Operating income, EBIT 303 22,318
Depreciation and amortisation of non-current assets 35,376 22,730
EBITDA 35,679 45,048
Revenue 357,263 400,234
EBITDA margin, % 10.0 11.3
Gross margin, % 2025 2024
Gross income 60,221 79,413
Revenue 357,263 400,234
Gross margin, % 16.9 19.8
Gross margin, excl. Items affecting comparability, % 2025 2024
Gross income 60,221 79,413
Impairment charge for the EX90 and ES90 platform 3,982 —
Restructuring costs 82 —
Gross income, excl. Items affecting comparability  64,285 79,413
Revenue 357,263 400,234
Gross margin, excl. Items affecting comparability, % 18.0 19.8
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
117 VOLVO CAR GROUP  / FINANCIALS / ALTERNATIVE 	PERFORMANCE 	MEASURES

===== SIDA 118 =====

Operating cash 2025 2024
Average two-year revenue ×10% 37,875 39,979
Operating cash  37,875 39,979
Invested capital 1) 2025 2024
Total assets 380,704 372,298
Receivables from parent company — —
Other long-term securities holdings –11,604 –12,410
Cash and cash equivalents –56,969 –52,117
Marketable securities –1 –4,959
Operating cash 37,875 39,979
Total current liabilities –160,419 –165,290
Current liabilities to parent company — —
Total current interest-bearing liabilities 2,030 9,056
Total invested capital  191,617 186,557
1)  Calculated on two-year average figures.
Return on invested capital, ROIC, % 2025 2024
EBIT (last 12 months) 303 22,318
Invested capital 191,617 186,537
Return on invested capital, ROIC, % 0.2 12.0
Equity ratio
31 Dec 
2025
31 Dec 
2024
Total equity 148,378 142,199
Total assets 373,172 388,235
Equity ratio, % 39.8 36.6
Net cash
31 Dec 
2025
31 Dec 
2024
Cash	and	cash	equivalents 57,564 56,373
Marketable securities 1 —
Liabilities	to	credit	institutions,	non-current –6,723 –3,885
Bonds,	non-current2) –21,549 –18,590
Other	interest-bearing	liabilities — —
Liabilities	to	credit	institutions,	current –922 –1,059
Bonds, current2) –1,500 –5,724
Net cash 26 871 27,115
2)  The bonds are presented above at amortised cost. The fair value risk of the EUR-denominated bonds is hedged, 
and the bonds with fixed interest payments have been swapped into floating interest payments. Consequently, 
a portion of the bonds is therefore measured at fair value through the income statement, while the remaining 
part is measured at amortised cost. On 31 December 2025, the fair value component amounted to SEK 95 
(235) m.
Liquidity
31 Dec
2025
31 Dec
2024
Cash and cash equivalents 57,564 56,373
Undrawn credit facilities 23,256 32,176
Marketable securities 1 —
Liquidity  80,821 88,549
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
118 VOLVO CAR GROUP  / FINANCIALS / ALTERNATIVE 	PERFORMANCE 	MEASURES

===== SIDA 119 =====

Note 2025 2024
Administrative expenses 4, 5 –38 –41
Operating loss –38 –41
Income from participation in subsidiaries 3 3,200 6,525
Interest income and similar credits 3 1,421 1,587
Interest expenses and similar charges –1,006 –1,011
Other financial income and expenses 6 –28 –25
Income before tax 3,549 7,035
Income tax 7 806 –583
Net income 4,355 6,452
Other	comprehensive	income	and	Net	income	are	consistent	since	there	are	no	items	in	other	  
comprehensive income.
Income Statements and  
Comprehensive Income – Parent Company
Note 31 Dec 2025 31 Dec 2024
ASSETS
Non-current assets
Participation in subsidiaries 8 22,433 18,103
Deferred tax assets 7 3,146 2,340
Receivables from Group companies 3 24,219 21,758
Total non-current assets 49,798 42,201
Current assets
Receivables from Group companies 3 22,062 22,780
Other current assets 79 93
Cash and cash equivalents 6 1
Total current assets 22,147 22,874
TOTAL ASSETS 71,945 65,075
Balance Sheets – Parent Company
Note 31 Dec 2025 31 Dec 2024
EQUITY & LIABILITIES
Equity 9
Restricted equity
Share capital 61 61
61 61
Non-restricted equity
Share premium reserve 31,654 31,654
Retained earnings 5,083 –1,222
Net income 4,355 6,452
41,092 36,884
Total equity 41,153 36,945
Non-current liabilities
Bonds 10 21,549 18,590
Liabilities to credit institutions 10 2,568 3,075
Total non-current liabilities 24,117 21,665
Current liabilities
Bonds 10 1,500 5,724
Liabilities to credit institutions 10 393 208
Liabilities to Group companies 3 4,267 4
Accounts payable — 3
Accrued expenses and prepaid income 515 526
Total current liabilities 6,675 6,465
TOTAL EQUITY & LIABILITIES 71,945 65,075
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
119 VOLVO CAR GROUP  / FINANCIALS / PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 120 =====

Restricted 
equity Non-restricted equity
Share capital 1)
Share  
premium  
reserve
Other   
contributed 
 capital
Retained 
 earnings Total
Balance at 1 January 2024 61 31,654 –3,500 11,690 39,905
Net income for the year — — — 6,452 6,452
Transactions with owners
Distribution of shares –30 — — –9,276 –9,306
Bonus issue 30 — — –30 —
Acquisition of treasury shares — — — –190 –190
Issue of treasury shares — — — 67 67
Share-based payments — — — 17 17
Transactions with owners — — — –9,412 –9,412
Balance at 31 December 2024 61 31,654 –3,500 8,730 36,945
Net income for the year — — — 4,355 4,355
Transactions with owners
Distribution of shares — — — 2 2
Acquisition of treasury shares — — — –219 –219
Issue of treasury shares — — — 126 126
Share-based payments — — — –56 –56
Transactions with owners — — — –147 –147
Balance at 31 December 2025 61 31,654 –3,500 12,938 41,153
1)  Share capital amounts to SEK 60 947 709 (60,947,709)
Statement of Changes in Equity 
– Parent Company
Statement of Cash Flows  
– Parent Company
Note 2025 2024
OPERATING ACTIVITIES
Operating income –38 –41
Interest received 1,428 1,512
Interest paid –1,020 –936
Other adjustments for non-cash items –2 –89
368 446
Movements in working capital
Change in current receivables Group companies 3 –5,853 11,973
Change in current receivables 14 –67
Change in current liabilities Group companies 3 1 3
Change in liabilities –13 5
Cash flow from movements in working capital –5,851 11,914
Cash flow from operating activities –5,483 12,360
Investments in shares and participations — –9,217
Dividend received from subsidiary 3 3,200 4,000
Cash flow from investing activities 3,200 –5,217
Cash flow from operating and investing activities –2,283 7,143
FINANCING ACTIVITIES
Proceeds from bond issuance 10 5,457 5,835
Repayment of bond 10 –5,732 –6,933
Repayment to credit institutions 10 –199 —
Change in non-current receivables Group companies 3 473 –5,835
Group contributions received 2,525 —
Acquisition of treasury shares –219 –190
Other –17 –19
Cash flow from financing activities 2,288 –7,142
Cash flow for the year 5 1
Cash and cash equivalents at beginning of year 1 —
Cash and cash equivalents at end of year 6 1
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
120 VOLVO CAR GROUP  / FINANCIALS / PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 121 =====

NOTE 1 ACCOUNTING POLICIES
Basis of preparation
The	Parent	company	has	prepared	its	financial	statements	in	
accordance	with	the	Swedish	Annual	Accounts	Act	(1995:1554)	and	
RFR	2,	Accounting	for	Legal	entities.	According	to	RFR	2,	the	Parent	
company	shall	apply	all	the	International	Financial	Reporting	Stand -
ards	endorsed	by	the	EU	as	far	as	this	is	possible	within	the	frame -
work	of	the	Swedish	Annual	Accounts	Act.	Changes	in	RFR	2	appli -
cable to the fiscal year beginning 1 January 2025, have had no 
material	impact	on	the	financial	statements	of	the	Parent	company.	
All	specific	accounting	policies	considered	material	to	Volvo	Car	
Group	are	described	in	conjunction	with	each	presented	note	in	the	
consolidated financial statements. The main deviations between the 
accounting	policies	applied	by	the	Volvo	Car	Group	and	the	Parent	
company are described below. 
Shares and participations in Group companies 
Shares	and	participations	in	Group	companies	are	recognised	at	cost	
in	the	Parent	company’s	balance	sheet	and	test	for	impairment	is	per-
formed annually or whenever there is an indication to do so. Dividends 
are	recognised	in	the	income	statement.	Profit	and	loss	from	all	
shares	and	participations	are	reported	within	income	before	tax.
Transaction costs directly attributable to acquisitions of shares 
and participations in Group companies are accounted for as an 
increase in the carrying amount. 
Group contributions made to subsidiaries are reported as an 
increase of investments in these subsidiaries. A review is at the 
same time made to conclude whether or not there is an impairment 
risk with regards to the same shares of the subsidiaries having 
received	the	group	contribution.	Tax	effect	of	these	group	contribu -
tions are recognised in the income statement. Group contributions 
made	to	parent	company	are	recognised	in	equity,	along	with	the	tax	
effect.	Received	group	contributions	from	subsidiaries	are	recog -
nised	as	financial	income.	Tax	effect	on	received	group	contribu -
tions	are	recognised	in	the	income	statement.	Received	group	  
Notes to The Parent Company Financial Statements
All	amounts	are	in	SEKm	unless	otherwise	stated.		  
Amounts in brackets refer to the preceding year.
contributions from parent company are recorded in equity, along 
with	the	tax	effect.	
Made shareholders’ contributions are recognised in shares in 
subsidiaries	and	as	such	they	are	subject	to	impairment	testing.	
Income taxes 
Deferred	tax	liability	on	untaxed	reserves	is	included	in	untaxed	
reserves in the parent company. 
Financial guarantees
The	company	applies	the	exemption	according	to	RFR	2	in	the	  
application	of	IFRS	9,	which	relates	to	accounting	and	valuation	of	
financial guarantee agreements for the benefit of subsidiaries and 
associated companies. The parent company reports the financial 
guarantee agreements as contingent liabilities.
Equity
In	accordance	with	the	Swedish	Annual	Accounts	Act,	equity	is	split	
between	restricted	and	non-restricted	equity.
NOTE 2 CRITICAL ACCOUNTING ESTIMATES  
AND JUDGEMENTS
Preparation	of	the	financial	statements	in	accordance	with	the	
Swedish	Annual	Accounts	Act	(1995:1554)	and	RFR	2	requires	the	
Company’s	Executive	management	and	Board	of	Directors	to	make	
estimates	and	judgements	as	well	as	to	make	assumptions	that	
affect application of the accounting policies and the reported 
assets,	liabilities,	income	and	expenses.	Critical	accounting	esti -
mates	and	judgements	applied	by	the	Volvo	Car	Group	are	
described	in	conjunction	with	applicable	note	in	the	consolidated	
financial statements. None of these critical accounting estimates 
are	applicable	to	the	parent	company.	Shares	and	participations	in	
Group	companies	recognised	at	cost	in	the	Parent	company	are	
being tested for impairment annually or if an indication of impair -
ment	exists.
NOTE 3 RELATED PARTY TRANSACTIONS
During the year, the parent company entered into the following 
transactions with related parties:
Sales of goods,  
services and other
Purchase of goods,  
services and other
2025 2024 2025 2024
Companies within the 
Volvo Car Group, % 100 100 1 1
 
2025 2024
Interest income from subsidiaries 1,418 1,583
Interest income from parent company 2 3
 
Receivables Payables
31 Dec 
2025
31 Dec 
2024
31 Dec 
2025
31 Dec 
2024
Companies within the 
Volvo Car Group 46,205 44,465 4,267 4
whereof short-term 22,062 22,780 4,267 4
Companies within the 
Geely Sweden Holdings 
Group 76 73 — —
whereof short-term — — — —
Business transactions between the parent company and related 
parties all arise in the normal course of business and are conducted 
on	the	basis	of	arm’s	length	principles.	Volvo	Car	AB	(publ.)	has	
received	group	contribution	from	its	subsidiary,	Volvo	Car	Corpora -
tion	of	SEK	—	(2,525)	m.		Volvo	Car	AB	(publ.)	has	given	group	  
contribution	of	SEK		4,262	(—)	m	to	its	subsidiary,	Volvo	Car	Corpo -
ration.	Further,	Volvo	Car	AB	(publ.)	has	received	dividend	of	SEK	
3,200	(4,000)	m	from	its	subsidiary,	Volvo	Car	Corporation.	
Volvo	Car	AB	(publ.)	does	not	engage	in	any	transactions	with	
Board	members	or	senior	executives	except	ordinary	remunerations	
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
121 VOLVO CAR GROUP  / FINANCIALS / NOTES	TO	THE	PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 122 =====

for	services.	For	further	information	regarding	remunerations,	see	
Note	8	-	Employees	and	remuneration	and	Note	9	–	Share-based	
remuneration, in the consolidated financial statements. 
NOTE 4 AUDIT FEES
TSEK 2025 2024
Deloitte
Audit fees –129 –158
Audit-related fees –465 –322
Total –594 –480
Audit fees	involve	audit	of	the	Annual	Report,	financial	accounts	
and the administration by the Board of Directors and the Managing  
Directors. The audit also includes advice and assistance as a result 
of the observations made in connection with the audit. 
Audit-related fees refer to other assignments to ensure quality in 
the financial statements including consultations on reporting  
requirements and internal control. 
NOTE 5 REMUNERATION TO THE BOARD OF DIRECTORS  
Information on renumeration to Board members by gender is shown 
in	Note	8	–	Employees	and	remuneration	and	Note	9	–	Share-based	
remuneration, in the consolidated statements.
NOTE 6 OTHER FINANCIAL INCOME AND EXPENSES
2025 2024
Expenses for credit facilities –21 –19
Bond fees –7 –6
Other financial income — 1
Other financial expenses — –1
Total –28 –25
NOTE 7 TAXES
Income tax recognised in income statement 2025 2024
Deferred taxes 806 –583
Total 806 –583
Reconciliation between current tax rate in  
Sweden and effective tax rate 2025 2024
Income before tax for the year 3,549 7,035
Tax according to applicable Swedish tax rate, 
20.6 (20.6)% –731 –1,449
Received dividends, non-taxable 659 824
Operating income/costs, non-taxable — 37
Tax effect of Group contributions given, made 
on shares in subsidiaries 878 —
Tax effect of deductible costs reported over 
equity — 5
Total 806 –583
The	corporate	statutory	income	tax	rate	in	Sweden	was	20.6	(20.6)	
per	cent.	The	effective	tax	rate	on	profit	before	taxes	was	–22.71	
(8.29)	per	cent.	Total	deferred	tax	assets	of	SEK	3,146	(	2,340)	m	
relates	to	tax	loss-carry	forward		SEK	15,271	(11,358)	m,	with	an	
indefinite	period	of	utilisation.	Deferred	tax	assets	are	only	
accounted	for	to	the	extent	there	are	taxable	temporary	differences	
or other factors that convincingly indicate there will be sufficient 
future	taxable	profit.	
NOTE 8 PARTICIPATION IN SUBSIDIARIES
31 Dec 
2025
31 Dec 
2024
At beginning of the year/acquired acquisition value 18,103 18,022
Given group contribution 4,262 —
Share-based payments 68 81
Total 22,433 18,103
Volvo Car AB's (publ.)  
investments in subsidiaries: Corp. ID no. Registered office No. of shares % interest held
Book value  
31 Dec 2025
Book value  
31 Dec 2024
Volvo Personvagnar AB 1)2)3) 556074-3089 Gothenburg / Sweden 724,889 100 22,433 18,103
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
122 VOLVO CAR GROUP  / FINANCIALS / NOTES	TO	THE	PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 123 =====

Legal entity Corp. ID no. Registered office
% interest 
held
Sweden
Automotive Components Floby AB 556981-8874 Falköping / Sweden 100
Fastighetsbolag Sörred 8:9 AB 559176-3890 Gothenburg / Sweden 100
Fastighetsbolag Sörred 8:11 AB 556994-2351 Gothenburg / Sweden 100
Fastighetsbolag Sörred 8:17 AB 559394-9851 Gothenburg / Sweden 100
HaleyTek AB 559307-9485 Gothenburg / Sweden 100
NOVO Energy AB 559344-2600 Gothenburg / Sweden 100
NVC Energy VII AB 559344-2410 Gothenburg / Sweden 100
VCLC Services AB 559470-7639 Gothenburg / Sweden 70
Volvo Bil i Göteborg AB 556056-6266 Gothenburg / Sweden 100
Volvo Car Australia Holding AB 556152-2680 Gothenburg / Sweden 100
Volvo Car Försäkrings AB 556877-5778 Gothenburg / Sweden 100
Volvo Car Insurance Distribution AB 559140-6417 Gothenburg / Sweden 100
Volvo Car Investment and Borrowing AB 556130-4246 Gothenburg / Sweden 100
Volvo Car NSC Holding AB 556754-8283 Gothenburg / Sweden 100
Volvo Car Real Estate and Assets 1 AB 55 6 20 5-7 2 9 8Gothenburg / Sweden 100
Volvo Car Real Estate and Assets 3 AB 559176-3908 Gothenburg / Sweden 100
Volvo Car Real Estate and Assets 7:24 AB 559064-3457 Gothenburg / Sweden 100
Volvo Car Services 6 AB 559140-6433 Gothenburg / Sweden 100
Volvo Car Services 9 Holding AB 559228-9366 Gothenburg / Sweden 100
Volvo Car Services 14 AB 559470-7647 Gothenburg / Sweden 100
Volvo Car Services Sweden AB 55 6 6 01-78 4 3Gothenburg / Sweden 100
Volvo Car Sverige AB 556034-3484 Gothenburg / Sweden 100
Volvo Car Technology Fund AB 556877-5760 Gothenburg / Sweden 100
Volvo Personvagnar Norden AB 556413-4848 Gothenburg / Sweden 100
Zenseact AB 559228-9358 Gothenburg / Sweden 100
Europe
Volvo Car Austria GmbH Austria 100
Volvo Car Czech Republic s.r.o. Czech Republic 100
Volvo Car Denmark A/S Denmark 100
Volvo Car Finland Oy Ab Finland 100
Volvo Car France SAS France 100
Volvo Car Germany GmbH Germany 100
Volvo Car Hellas Anonymous 4) Greece 100
Volvo Car Hungary Trading and Service Ltd Hungary 100
Volvo Car Gallery Ltd Hungary 100
Volvo Car Ireland Ltd Ireland 100
Volvo Car Italia S.p.A. Italy 100
Legal entity Registered office
% interest 
held
Volvo Car Nederland B.V. The Netherlands 100
Volvo Car Nederland Financial Services B.V. The Netherlands 100
SNEBE Holding B.V. The Netherlands 100
SNITA Holding B.V. The Netherlands 100
SWENE Holding B.V. The Netherlands 100
Volvo Car Norway AS Norway 100
Volvo Car Poland Sp. z.o.o. Poland 100
Volvo Car Portugal S.A. Portugal 100
Volvo Car Espana S.L. Spain 100
Volvo Car Slovakia s.r.o Slovakia 100
Volvo Car Switzerland AG Switzerland 100
Volvo Car UK Ltd United Kingdom 100
North and South America
Volvo Car Brasil Importacao e Comercio de Veiculos Ltda Brazil 100
Volvo Car do Brasil Automoveis Ltda Brazil 100
Volvo Car Canada Ltd Canada 100
Volvo Car Mexico S.A. de C.V. Mexico 100
Volvo Car Financial Services U.S., LLC USA 100
Volvo Car North America, LLC USA 100
Africa and Asia
Volvo Cars (China) Investment Co., Ltd. China 100
Volvo Cars Technology (Shanghai) Co., Ltd. China 100
Volvo Auto India Pvt. Ltd India 100
Volvo Car Japan Ltd Japan 100
Volvo Car Korea Co., Ltd Korea 100
Volvo Car Manufacturing Malaysia Sdn Bhd Malaysia 100
Volvo Car Singapore Pte. Ltd Singapore 100
Volvo Car South Africa Pty Ltd South Africa 100
Volvo Car Taiwan Ltd Taiwan 100
Volvo Car Turkey Otomobil Ltd Sirketi Türkiye 100
Volvo Car RDC Middle East FZE United Arab Emirates 100
1)  Referred to as Volvo Car Corporation. 
2)  PSINV AB, effective as of 14 May 2025, and Volvo Car Mobility Sweden AB, effective as of 5 November 2025, 
were merged into Volvo Car Corporation. CLPE AB is liquidated at 31 December 2025.
3)  From 2 October 2025, Volvo Car Services 15 AB is a indirect wholly-owned subsidary.
4)  Legal name in full: Volvo Car Hellas Anonymous and Industrial company of car and spare parts imports and trade.
The share of voting power corresponds to holdings in per cent as seen in the table above. The countries where the 
subsidiaries are registered are also where their main operations are carried out.  
Details	of	Volvo	Car	Corporation’s	directly	owned	subsidiaries	at	the	end	of	the	reporting	period	are	presented	in	the	following	table. OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
123 VOLVO CAR GROUP  / FINANCIALS / NOTES	TO	THE	PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 124 =====

Significant restrictions
For	some	subsidiaries	there	are	restrictions	on	the	Volvo	Car	
Group’s ability to access or use cash from these subsidiaries, for 
more information on cash that is not available or with other limita -
tions, see Note 20 – Marketable securities and cash and cash  
equivalents in the consolidated financial statements.
 
Details of non-wholly-owned subsidiaries that have 
 non- controlling interests
On	25	June	2015,	Volvo	Car	Group,	through	one	of	its	wholly 	-owned	
subsidiaries,	Volvo	Cars	(China)	Investment	Co.,	Ltd,	acquired	an	
additional	20	per	cent	in	Volvo	Cars’	Chinese	joint	venture	compa -
nies.	In	the	consolidated	financial	statements,	these	joint	venture	
companies are classified as subsidiaries and fully consolidated with 
a	non-controlling	interest	of	50	per	cent	since	Volvo	Car	Group	has	
the	decision-making	power	over	the	operations.	
Further,	Daqing	Volvo	Car	Manufacturing	Co.,	Ltd	holds	100	per	
cent	of	the	shares	in	Volvo	Car	(Asia	Pacific)	Investment	Holding	Co.,	
Ltd	which	holds	100	per	cent	of	Zhongjia	Automobile	Manufacturing	
(Chengdu)	Co.,	Ltd	and	Shanghai	Zhaowo	Auto	Sales	Co.,	Ltd.
On	1	August	2024,	Volvo	Car	Corporation	acquired	the	remaining	
40	per	cent	of	the	shares	in	HaleyTek	AB	from	ECARX	Technology	
Co.,	Ltd,	a	related	company	with	the	same	ultimate	shareholder	as	
Volvo	Car	Group,	but	outside	the	Geely	sphere	of	companies.	As	a	
consequence,	the	non-controlling	interest	ceased.	
Registered 
office % interest held
Profit allocated to  
non-controlling interests
Accumulated  
non-controlling interests
Legal entity:
31 Dec  
2025
31 Dec  
2024
31 Dec  
2025
31 Dec  
2024
31 Dec  
2025
31 Dec  
2024
Daqing Volvo Car Manufacturing Co., Ltd. 1) China 50 50 –2,980 652 1,186 4,696
Shanghai Volvo Car Research and Development Co., Ltd. 1) China 50 50 2 2 110 124
HaleyTek AB Sweden — — — –36 — —
NOVO Energy AB Sweden — 50 –164 –85 — –85
VCLC Services AB Sweden 30 30 — — 3 3
Total non-controlling interests –3,142 533 1,299 4,738
 
1)  50 per cent held by Zhejiang Geely Holding Group Co., Ltd, which is the ultimate parent company of the Volvo Car Group.
On	1	October	2024,	Lynk	&	Co	International	AB,	a	related	party	
company within the Geely sphere of companies, acquired 30 per 
cent	of	the	shareholding	in	the	wholly-owned	subsidiary	VCLC	  
Services	AB.	VCLC	Services	AB	is	still	classified	as	a	subsidiary	and	
fully	consolidated	with	a	non-controlling	interest	of	30	per	cent	
since	Volvo	Car	Group	has	the	power	of	control.
On	4	July	2025,	Volvo	Car	Corporation	acquired	the	remaining	50	
per	cent	of	the	shares	in	Novo	Energy	AB.	As	a	consequence,	the	
non-controlling	interest	ceased.	The	transaction	was	succeeding	
the	initiated	process	from	30	October	2024,	when	Volvo	Cars	initi -
ated	a	process	to	acquire	Northvolt	AB’s	shares	in	the	joint	venture	
company	NOVO	Energy	AB	by	executing	its	redemption	right.	
NOVO	Energy	AB	and	its	wholly-owned	subsidiaries	were	from	
30	October	2024	reclassified	from	joint	venture	to	subsidiaries	and	
fully	consolidated,	with	a	non-controlling	interest	of	50	per	cent.	
For	more	information,	see	Note	27	–	Business	combinations	and	
divestments, in the consolidated financial statements.
 
The	table	below	shows	details	of	non-wholly-owned	subsidiaries	of	
the	Group	that	have	non-controlling	interests.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
124 VOLVO CAR GROUP  / FINANCIALS / NOTES	TO	THE	PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 125 =====

NOTE 9 EQUITY
Volvo	Car	AB	(publ.)	is	listed	on	the	Nasdaq	Stockholm	Stock	
Exchange	(ticker	symbol:	VOLCAR).	
On	26	March	2024,	the	Annual	General	Meeting	resolved,	in	
accordance with the Board of Directors proposal, to distribute a 
portion	of	Volvo	Cars’	shareholding	in	Polestar	Automotive	Holding	
UK	PLC	to	Volvo	Cars’	shareholders	by	way	of	a	share	split	(2:1)	of	
the class B shares. A reduction of the share capital through redemp -
tion of shares, and an increase of the share capital through a bonus 
issue without issuance of new shares. The distribution of shares, 
reflected	at	fair	value	at	8	May,	reduced	the	equity	by	SEK	9,306	m	
including	transaction	costs.	For	further	information,	see	Note	12	–	
Investments	in	joint	ventures	and	associates	and	Note	21	–	Equity,	
in the consolidated financial statements.
Equity-settled	share-based	payments	in	connection	with	
employee incentive plans are recognised in equity and settled using 
treasury	shares.	For	further	information,	see	Note	9	–	Share-based	
remuneration	and	Note	21	–	Equity,	in	the	consolidated	financial	
statements.
NOTE 10 FINANCIAL INSTRUMENTS
Bonds
In	January	2025,	a	EUR	500	m	bond,	issued	in	2017,	was	repaid	by	
Volvo	Car	AB	(publ.).	In	June	2025,	a	green	bond	of	EUR	500m	was	
raised through issuance with a tenor of four years. In April 2024, 
a	EUR	600	m	bond,	issued	in	April	2019,	was	repaid.	In	May	2024,	
a	EUR	500	m	green	bond	was	issued.
Liabilities to credit institutions
In	September	2025,	a	new	green	bilateral	eight-year	loan	agreement	
of	EUR	150	m	was	signed.	The	loan	facility	remains	undrawn	as	of	
the end of 2025.
In	November	2025,	the	first	extension	option	on	the	existing	  
sustainability-linked	Revolving	Credit	Facilities	was	exercised,	
extending	maturities	by	one	year.	The	updated	maturities	for	the	
Revolving	Credit	Facilities	of	EUR	500	m	and	EUR	1	500	m	are	in	
2028 and 2030, respectively.
In	December	2024,	Revolving	Credit	Facilities	of	EUR	1,500	m	
with	a	five-year	tenor	and	EUR	500	m	with	a	three-year	tenor	were	
signed.	Both	facilities	are	sustainability-linked	and	have	two	one-
year	extension	options.	The	new	facilities	have	refinanced	the	
Revolving	Credit	Facility	of	EUR	1,300	m	with	maturity	in	2026.
 No	fair	value	hedge	is	applied	in	Volvo	Car	AB	(publ.).
For	more	information	see	Note	19	–	Financial	risks	and	financial	
instruments in the consolidated financial statements. 
 
NOTE 11 CONTINGENT LIABILITIES
Volvo	Car	AB	(publ.)	has	a	parental	guarantee	for	Volvo	Car	Corpo -
ration for the purpose of securing the various obligations and liabili -
ties	under	the	facility	agreement	with	EIB.	The	guarantee	is	in	total	
of	EUR	345	(345)	m	and	USD	438	(—)	m.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
125 VOLVO CAR GROUP  / FINANCIALS / NOTES	TO	THE	PARENT	COMPANY	FINANCIAL	STATEMENTS

===== SIDA 126 =====

Proposed distribution of 
non-restricted equity
The parent company
The following funds are at the disposal of Annual General Meeting 
(AGM):
Share	premium	reserve SEK  31,653,517,859    
Retained	earnings	brought	forward SEK  5,083,584,404    
Net income for the year SEK  4,355,103,303    
At the disposal of the AGM SEK  41,092,205,566    
The Board proposes the following allocation of funds:
Carried forward SEK  41,092,205,566    
The	Board	of	Directors	and	the	CEO	hereby	certify	that	the	consolidated	financial	statements	have	been	prepared	in	accordance	with	Interna -
tional	Financial	Reporting	Standards,	IFRS,	as	adopted	by	the	EU	and	provide	a	true	and	fair	view	of	the	Group’s	financial	position	and	earnings.		
The	Annual	Report	has	been	prepared	in	accordance	with	generally	accepted	accounting	principles	and	provides	a	fair	and	true	view	of	the		 Parent	
company’s	financial	position	and	earnings.	The	Board	of	Directors’	report	for	the	Group	and	the	Parent	Company	provides	a	true	and	fair	overview	
of	the	development	of	the	operations,	financial	position	and	earnings	of	the	Group	and	Parent	company	and	describes	material	risks	and	uncer -
tainty	factors	facing	the	Parent	company	and	the	companies	included	in	the	Group.	The	Board	of	Directors	and	the	CEO	certify	that	the	Sustain -
ability	Statement	has	been	prepared	in	accordance	with	European	Sustainability	Reporting	Standards	(ESRS)	as	adopted	by	the	EU	and	the	  
EU	Taxonomy	Regulation.
The annual report is dated on 4 March 2026
Gothenburg, 4 March 2026
Eric Li (Li Shufu)
Chairperson of the Board
 Håkan Samuelsson  Daniel Li (Li Donghui)  Jonas Samuelson
 CEO Board member Board member
 Ruby Lu (Rong Lu) Diarmuid O’Connell  Lila Tretikov
 Board member Board member Board member
 Anna Mossberg  Pieter Nota  Caroline Grégoire-Sainte-Marie
 Board member Board member Board member
 Adrian Avdullahu Jörgen Olsson Zara Biske
 Employee representative Employee representative Employee representative
Our	audit	report	on	the	Annual	report	and	consolidated	accounts,	and	our	limited	assurance	report	
on	the	Sustainability	statement	have	been	submitted	on	4	March	2026
Deloitte AB
Fredrik Jonsson
Authorized Public Accountant
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
126 VOLVO CAR GROUP  / FINANCIALS / PROPOSED	DISTRIBUTION	OF	NON-RESTRICTED	EQUITY

===== SIDA 127 =====

Auditor’s Report
This auditor’s report is a translation of the Swedish language original. 
In the events of any differences between this translation and the 
Swedish original the latter shall prevail.
To the general meeting of the shareholders of Volvo Car 
AB (publ.) corporate identity number 556810-8988
Report on the annual accounts and consolidated 
accounts
Opinions
We have audited the annual accounts and consolidated accounts of 
Volvo	Car	AB	(publ)	for	the	financial	year	2025-01-01–2025-12-31.	
The annual accounts and consolidated accounts of the company are 
included on pages 29–35, 61–114, 119–126 in this document.
In our opinion, the annual accounts have been prepared in 
accordance with the Annual Accounts Act and present fairly, in all 
material respects, the financial position of the parent company as of 
31 December 2025 and its financial performance and cash flow for 
the year then ended in accordance with the Annual Accounts Act. 
The consolidated accounts have been prepared in accordance with 
the Annual Accounts Act and present fairly, in all material respects, 
the financial position of the group as of 31 December 2025 and their 
financial performance and cash flow for the year then ended in 
accordance	with	IFRS	Accounting	Standards,	as	adopted	by	the	EU,	
and the Annual Accounts Act. The statutory administration report is 
consistent with the other parts of the annual accounts and consoli -
dated accounts.
We therefore recommend that the general meeting of sharehold -
ers adopts the income statement and balance sheet for the parent 
company and the group. 
Our	opinions	in	this	report	on	the	annual	accounts	and	consoli -
dated accounts are consistent with the content of the additional 
report that has been submitted to the parent company’s audit com-
mittee	in	accordance	with	the	Audit	Regulation	(537/2014)	Article	11.	
Basis for Opinions
We	conducted	our	audit	in	accordance	with	International	Standards	
on	Auditing	(ISA)	and	generally	accepted	auditing	standards	in	  
Sweden.	Our	responsibilities	under	those	standards	are	further	
described	in	the	Auditor’s	Responsibilities	section.	We	are	inde -
pendent of the parent company and the group in accordance with 
professional	ethics	for	accountants	in	Sweden	and	have	otherwise	
fulfilled our ethical responsibilities in accordance with these 
requirements.  This includes that, based on the best of our knowl -
edge and belief, no prohibited services referred to in the Audit  
Regulation	(537/2014)	Article	5.1	have	been	provided	to	the	audited	
company or, where applicable, its parent company or its controlled 
companies	within	the	EU.
We believe that the audit evidence we have obtained is sufficient 
and appropriate to provide a basis for our opinions.
Key Audit Matters
Key	audit	matters	of	the	audit	are	those	matters	that,	in	our	profes -
sional	judgment,	were	of	most	significance	in	our	audit	of	the	annual	
accounts and consolidated accounts of the current period. These 
matters	were	addressed	in	the	context	of	our	audit	of,	and	in	form -
ing our opinion thereon, the annual accounts and consolidated 
accounts as a whole, but we do not provide a separate opinion on 
these matters.
Accounting for contractual warranties and related 
 campaign decisions
The	Company	grants	product	warranties	to	their	end	customers,	
which are contractual warranties covering certain defects in mate -
rial	and	workmanship	of	Volvo	Car	products	sold.	Estimated	war -
ranty costs include contractual warranty and other costs not cov -
ered by standard contractual commitments. All warranty provisions 
are recognized at the point of time when the sale of the vehicles or 
spare	parts	are	made,	subsequently	adjusted	for	trends	in	claims	
data.	Further,	provision	of	warranty	is	adjusted	as	campaign	deci -
sions for specific quality problems are made.  The accounting princi -
ples	for	warranty	and	management’s	significant	judgments	applied	
in	relation	thereto	are	further	described	in	Note	23	“Current	and	
Other	Non-Current	Provisions”	to	the	annual	report.
The principal considerations for our determination that provision 
for contractual warranties and related campaign decisions is a key 
audit	matter	are	(i)	the	significant	judgment	by	management	in	the	
estimation	of	the	provision	and	(ii)	high	degree	of	auditor	judge -
ment,	subjectivity	and	effort	in	performing	procedures	to	evaluate	
management’s assumptions related to the nature, frequency and 
cost of future claims. 
Our	audit	procedures	included,	but	were	not	limited	to:
• Evaluating	the	process	used,	and	assessing	the	assumptions	
applied, in determining the estimated provision for contractual 
warranty	and	adjustments	for	campaign	decisions.
• Assessing the reasonableness of the methodology used in deter -
mination	of	provision	for	contractual	warranty	and	adjustments	for	
campaign decisions, including accounting principles applied.  
• Performing	substantive	analytical	procedures	on	provision	for	con -
tractual	warranty	based	on	relevant	data	and	expected	changes.
• On	a	sample	basis,	assessing	and	challenging	the	reasonableness	
of management´s significant assumptions in relation to release in 
provisions,	expected	number	of	products	returned	and	the	valua -
tion of estimated cost for campaign decisions.
• Reading	minutes	and	making	inquiries	with	management	to	evalu -
ate that decisions on campaigns, which have been taken during the 
year and up to the signing of the annual report, have been reflected 
in the correct period.
• In	collaboration	with	our	IT-specialists,	audited	relevant	general	
IT-controls	for	IT-systems	used	in	the	financial	reporting	of	con -
tractual warranty provisions. 
Impairment of long-lived assets for the EX90 and ES90  
platform
The	Group	reports	significant	values	of	tangible	and	intangible	fixed	
assets	in	the	cash-generating	unit	(CGU)	for	the	platform	of	the	vehicle	
models	EX90	and	ES90.	During	the	year,	indications	of	impairment	
were identified, and the company has prepared an impairment test. The 
company’s assessment of the recoverable amount is based on its value 
in use, which is derived from a discounted cash flow model using inter-
nal business plans. The assessment requires management to make sig-
nificant	estimates	and	assumptions	regarding,	for	example,	forecasts	
for sales volumes and sales margins, including emission credits and 
discount rates.
During	2025,	Volvo	Cars	reported	an	impairment	charge	of	SEK	11.4	
billion	attributable	to	the	cash-generating	unit	(CGU),	EX90	and	ES90	
platform. The impairment was primarily driven by delays in the launch 
of	the	EX90	and	ES90	platform,	which	led	to	increased	development	
costs, unfavorable macroeconomic conditions, the imposition of 
increased tariffs which significantly affected production costs and 
profitability, and a slower transition from internal combustion engine 
vehicles	(ICE)	to	battery	electric	vehicles	(BEV)	than	previously	
expected.	The	accounting	principles	for	impairment	of	long-lived	
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
127 VOLVO CAR GROUP  / FINANCIALS / AUDITOR’S	REPORT

===== SIDA 128 =====

assets	and	management’s	significant	judgments	in	connection	with	
these	are	described	in	more	detail	in	Note	15	“Intangible	Assets”	
and	Note	16	“Tangible	Assets”	in	the	annual	report.
The principal considerations for identifying the impairment of the 
EX90	and	ES90	platform	(CGU)	as	a	key	audit	matter	include	(i)	man-
agement’s	significant	judgments	made	in	selecting	key	assumptions	
underpinning	the	discounted	cash	flow	model	(DCF),	including	vol-
ume forecasts, sales margins including emission credits and discount 
rates,	(ii)	the	complexity	of	the	model	and	its	sensitivity	to	changes	in	
these	assumptions,	and	(iii)	the	material	financial	impact	that	the	
impairment has on the Group’s consolidated financial statements.
Our	audit	procedures	included,	but	were	not	limited	to:
• With the assistance of our valuation specialists, evaluate the rea -
sonableness of the method applied in preparing the impairment 
test to determine the estimated recoverable amount.
• Evaluate	the	process	and	management’s	forecasts	regarding	
future sales growth, operating profit, working capital, and invest-
ment needs by comparing actual results with management’s his-
torical	forecasts	and	consistency	with	the	board-approved	busi-
ness plan.
• With the assistance of our valuation specialists, evaluate the dis-
count rates selected by management, including testing of underly-
ing source data and the mathematical correctness of the calcula-
tions, and develop a range of independent estimates for 
comparison.
• With the assistance of our valuation specialists, evaluate the com-
pany’s sensitivity analyses and compare these with our own sensi-
tivity analyses to confirm the disclosures regarding assumptions 
that are most sensitive to reasonable changes, that could result in 
the	carrying	amount	exceeding	the	recoverable	amount	of	the	
cash-generating	unit.
• With the assistance of our accounting specialists, assess that the 
required disclosures have been provided in the annual report.
Other information than the annual accounts and  
consolidated accounts
This document also contains other information than the annual 
accounts and consolidated accounts and is found on pages 1–28, 
36–41, 115–118, 130–213, 216–218, 220–227. The other information 
also	includes	the	Renumeration	Report	which	we	received	before	
the signing date of this Auditor’s report. The Board of Directors and 
the Managing Director are responsible for this other information.
Our	opinion	on	the	annual	accounts	and	consolidated	accounts	
does	not	cover	this	other	information	and	we	do	not	express	any	
form of assurance conclusion regarding this other information
In connection with our audit of the annual accounts and consoli -
dated accounts, our responsibility is to read the information identi -
fied above and consider whether the information is materially incon -
sistent with the annual accounts and consolidated accounts. In this 
procedure we also take into account our knowledge otherwise 
obtained in the audit and assess whether the information otherwise 
appears to be materially misstated.
If we, based on the work performed concerning this information, 
conclude that there is a material misstatement of this other infor -
mation, we are required to report that fact. We have nothing to 
report in this regard.
Responsibilities of the Board of Directors and the  
Managing Director
The Board of Directors and the Managing Director are responsible 
for the preparation of the annual accounts and consolidated 
accounts and that they give a fair presentation in accordance with 
the Annual Accounts Act and, concerning the consolidated 
accounts,	in	accordance	with	IFRS	Accounting	Standards	as	adopted 	
by	the	EU.		The	Board	of	Directors	and	the	Managing	Director	are	
also responsible for such internal control as they determine is neces -
sary to enable the preparation of annual accounts and consolidated 
accounts that are free from material misstatement, whether due to 
fraud or error.
In preparing the annual accounts and consolidated accounts, The 
Board of Directors and the Managing Director are responsible for 
the assessment of the company’s and the group’s ability to continue 
as a going concern. They disclose, as applicable, matters related to 
going concern and using the going concern basis of accounting.  
The going concern basis of accounting is however not applied if the 
Board of Directors and the Managing Director intends to liquidate 
the company, to cease operations, or has no realistic alternative but 
to do so.  
The	Audit	Committee	shall,	without	prejudice	to	the	Board	of	
Director’s responsibilities and tasks in general, among other things 
oversee the company’s financial reporting process.
Auditor’s responsibility
Our	objectives	are	to	obtain	reasonable	assurance	about	whether	
the annual accounts and consolidated accounts as a whole are free 
from material misstatement, whether due to fraud or error, and to 
issue	an	auditor’s	report	that	includes	our	opinions.	Reasonable	
assurance is a high level of assurance, but is not a guarantee that an 
audit	conducted	in	accordance	with	ISAs	and	generally	accepted	
auditing	standards	in	Sweden	will	always	detect	a	material	mis -
statement	when	it	exists.
Misstatements can arise from fraud or error and are considered 
material if, individually or in the aggregate, they could reasonably be 
expected	to	influence	the	economic	decisions	of	users	taken	on	the	
basis of these annual accounts and consolidated accounts.
A further description of our responsibilities for the audit of the 
annual	accounts	and	consolidated	accounts	is	located	at	the	Swed -
ish	Inspectorate	of	Auditors	website:	www.revisorsinspektionen.se/
revisornsansvar. This description forms part of the auditor´s report.
Report on other legal and regulatory requirements
Opinions
In addition to our audit of the annual accounts and consolidated 
accounts, we have also audited the administration of the Board of 
Directors	and	the	Managing	Director	of	Volvo	Car	AB	(publ)	for	the	
financial	year	2025-01-01	-	2025-12-31	and	the	proposed	appropri-
ations of the company’s profit or loss.
We recommend to the general meeting of shareholders that the 
profit to be appropriated in accordance with the proposal in the 
statutory administration report and that the members of the Board 
of Directors and the Managing Director be discharged from liability 
for the financial year. 
Basis for Opinions
We conducted the audit in accordance with generally accepted 
auditing	standards	in	Sweden.	Our	responsibilities	under	those	
standards	are	further	described	in	the	Auditor’s	Responsibilities	
section. We are independent of the parent company and the group 
in	accordance	with	professional	ethics	for	accountants	in	Sweden	
and have otherwise fulfilled our ethical responsibilities in accord -
ance with these requirements.
We believe that the audit evidence we have obtained is sufficient 
and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and the Managing 
Director
The Board of Directors is responsible for the proposal for appropria -
tions of the company’s profit or loss. At the proposal of a dividend, 
this	includes	an	assessment	of	whether	the	dividend	is	justifiable	
considering the requirements which the company’s and the group’s 
type of operations, size and risks place on the size of the parent 
company’s and the group’s equity, consolidation requirements, 
liquidity and position in general.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
128 VOLVO CAR GROUP  / FINANCIALS / AUDITOR’S	REPORT

===== SIDA 129 =====

The Board of Directors is responsible for the company’s organization 
and the administration of the company’s affairs. This includes among 
other things continuous assessment of the company’s and the 
group’s financial situation and ensuring that the company’s organiza -
tion is designed so that the accounting, management of assets and 
the company’s financial affairs otherwise are controlled in a reassur -
ing manner. The Managing Director shall manage the ongoing admin-
istration according to the Board of Directors’ guidelines and instruc -
tions and among other matters take measures that are necessary to 
fulfill the company’s accounting in accordance with law and handle 
the management of assets in a reassuring manner.
Auditor’s responsibility
Our	objective	concerning	the	audit	of	the	administration,	and	
thereby our opinion about discharge from liability, is to obtain audit 
evidence to assess with a reasonable degree of assurance whether 
any member of the Board of Directors or the Managing Director in 
any material respect:
• has undertaken any action or been guilty of any omission which 
can give rise to liability to the company, or
• in	any	other	way	has	acted	in	contravention	of	the	Companies	
Act, the Annual Accounts Act or the Articles of Association.
Our	objective	concerning	the	audit	of	the	proposed	appropriations	
of the company’s profit or loss, and thereby our opinion about this, is 
to assess with reasonable degree of assurance whether the pro -
posal	is	in	accordance	with	the	Companies	Act.
Reasonable	assurance	is	a	high	level	of	assurance,	but	is	not	a	
guarantee that an audit conducted in accordance with generally 
accepted	auditing	standards	in	Sweden	will	always	detect	actions	or	
omissions that can give rise to liability to the company, or that the 
proposed appropriations of the company’s profit or loss are not in 
accordance	with	the	Companies	Act.
A further description of our responsibilities for the audit of the 
management’s	administration	is	located	at	the	Swedish	Inspector -
ate	of	Auditors	website:	www.revisorsinspektionen.se/rn/showdoc -
ument/documents/rev_dok/revisors_ansvar.pdf. 	This	description	
forms part of the auditor´s report. 
The auditor’s examination of the Esef report
Opinion
In addition to our audit of the annual accounts and consolidated 
accounts,	we	have	also	examined	that	the	Board	of	Directors	and	
the Managing Director  have prepared the annual accounts and 
 consolidated accounts in a format that enables uniform electronic 
reporting	(the	Esef	report)	pursuant	to	Chapter	16,	Section	4	a	of	the	
Swedish	Securities	Market	Act	(2007:528)	for	Volvo	Car	AB	(publ)	
for	the	financial	year	2025-01-01	-	2025-12-31.
Our	examination	and	our	opinion	relate	only	to	the	statutory	
requirements.
In	our	opinion,	the	Esef	report	has	been	prepared	in	a	format	that,	
in all material respects, enables uniform electronic reporting.
Basis for opinion
We	have	performed	the	examination	in	accordance	with	FAR’s	rec -
ommendation	RevR	18	Examination	of	the	Esef	report.	Our	responsi -
bility under this recommendation is described in more detail in the 
Auditors’	responsibility	section.	We	are	independent	of	Volvo	Car	AB	
(publ)	in	accordance	with	professional	ethics	for	accountants	in	
Sweden	and	have	otherwise	fulfilled	our	ethical	responsibilities	in	
accordance with these requirements.
We believe that the evidence we have obtained is sufficient and 
appropriate to provide a basis for our opinion. 
Responsibilities of the Board of Directors and the Managing 
Director
The Board of Directors and the Managing Director are responsible 
for	the	preparation	of	the	Esef	report	in	accordance	with	the	Chap -
ter	16,	Section	4	a	of	the	Swedish	Securities	Market	Act	(2007:528),	
and for such internal control that  the Board of Directors and the 
Managing	Director	determine	is	necessary	to	prepare	the	Esef	
report without material misstatements, whether due to fraud or 
error.
Auditor’s responsibility
Our	responsibility	is	to	obtain	reasonable	assurance	whether	the	
Esef	report	is	in	all	material	respects	prepared	in	a	format	that	
meets	the	requirements	of	Chapter	16,	Section	4(a)	of	the	Swedish	
Securities	Market	Act	(2007:528),	based	on	the	procedures	per -
formed.
RevR	18	requires	us	to	plan	and	execute	procedures	to	achieve	
reasonable	assurance	that	the	Esef	report	is	prepared	in	a	format	
that meets these requirements.
Reasonable	assurance	is	a	high	level	of	assurance,	but	it	is	not	a	
guarantee	that	an	engagement	carried	out	according	to	RevR	18	and	
generally	accepted	auditing	standards	in	Sweden	will	always	detect	
a	material	misstatement	when	it	exists.	Misstatements	can	arise	
from fraud or error and are considered material if, individually or in 
aggregate,	they	could	reasonably	be	expected	to	influence	the	
	economic	decisions	of	users	taken	on	the	basis	of	the	Esef	report.	
The	firm	applies	International	Standard	on	Quality	Management	1,	
which requires the firm to design, implement and operate a system 
of quality management including policies or procedures regarding 
compliance with ethical requirements, professional standards and 
applicable legal and regulatory requirements.
The	examination	involves	obtaining	evidence,	through	various	
procedures,	that	the	Esef	report	has	been	prepared	in	a	format	that	
enables uniform electronic reporting of the annual accounts and 
consolidated accounts. The procedures selected depend on the 
auditor’s	judgment,	including	the	assessment	of	the	risks	of	material	
misstatement in the report, whether due to fraud or error. In carry -
ing out this risk assessment, and in order to design audit procedures 
that are appropriate in the circumstances, the auditor considers 
those elements of internal control that are relevant to the prepara -
tion	of	the	Esef	report	by	the	Board	of	Directors	and	the	Managing	
Director,	but	not	for	the	purpose	of	expressing	an	opinion	on	the	
effectiveness	of	those	internal	controls.	The	examination	also	
includes an evaluation of the appropriateness and reasonableness 
of assumptions made by the Board of Directors and the Managing 
Director.
The	procedures	mainly	include	a	validation	that	the	Esef	report	
has	been	prepared	in	a	valid	XHMTL	format	and	a	reconciliation	of	
the	Esef	report	with	the	audited	annual	accounts	and	consolidated	
accounts.
Furthermore,	the	procedures	also	include	an	assessment	of	
whether the consolidated statement of financial performance, 
financial position, changes in equity, cash flow and disclosures in the 
Esef	report	have	been	marked	with	iXBRL	in	accordance	with	what	
follows	from	the	Esef	regulation.
Deloitte	AB,	was	appointed	auditor	of	Volvo	Car	AB	(publ)	by	the	
general	meeting	of	the	shareholders	on	the	2025-04-03	and	has	
been	the	company’s	auditor	since	2010-06-22.
Gothenburg 4 March, 2026
Deloitte AB
Signature on Swedish original
Fredrik	Jonsson
Authorized public accountant
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  
CONSOLIDATED FINANCIAL  
STATEMENTS 
NOTES TO THE CONSOLIDATED  
FINANCIAL STATEMENTS 
ALTERNATIVE PERFORMANCE  
MEASURES 
PARENT COMPANY FINANCIAL  
STATEMENTS 
NOTES TO THE PARENT COMPANY  
FINANCIAL STATEMENTS 
PROPOSED DISTRIBUTION OF  
NON-RESTRICTED EQUITY  
AUDITOR’S REPORT  
SUSTAINABILITY  130
THE SHARE 220
OUR HERITAGE 222
129 VOLVO CAR GROUP  / FINANCIALS / AUDITOR’S	REPORT

===== SIDA 130 =====

Sustainability
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  61
SUSTAINABILITY  
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / SUSTAINABILITY 130

===== SIDA 131 =====

Sustainability
table of contents GENERAL INFORMATION
133  About our Sustainability Statement
134  Strategy, business model and value chain
138  Stakeholder engagement
138  Ratings
140  Sustainability governance
145  Materiality assessment
ENVIRONMENTAL INFORMATION
149  EU Taxonomy Report
153  Climate change
164  Pollution
167  Water
170  Biodiversity and ecosystems
173  Resource use and circular economy
SOCIAL INFORMATION
180  Own workforce
189  Workers in the value chain
195  Consumers and end-users
GOVERNANCE INFORMATION
200  Business conduct
 
OTHER INFORMATION
207  Restatements
209  Index of ESRS Disclosure Requirements 
211   List of datapoints that derive from other  
EU legislation
213  Statement on due diligence
214  Auditor’s limited assurance report on  
Volvo Cars’ statutory Sustainability Statement
216  UN Sustainable Development Goals
217  Green Financing Report
219  Auditor’s limited assurance report on  
Volvo Cars’ Green Financing Report
132–147 148–178
199–205179–198 206–219
The Sustainability Statement, prepared in accordance with ESRS, is included in page 130–213
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  61
SUSTAINABILITY  
GENERAL	INFORMATION	
ENVIRONMENTAL	INFORMATION	
EU	Taxonomy	Report	
Climate	change	
Pollution	
Water 
Biodiversity and ecosystems  
Resource	use	and	circular	economy	
SOCIAL	INFORMATION 
Own	workforce	
Workers in the value chain 
Consumers	and	end-users	
GOVERNANCE	INFORMATION 
Business conduct  
OTHER	INFORMATION 
THE SHARE 220
OUR HERITAGE 222
131
 VOLVO CAR GROUP  / SUSTAINABILITY

===== SIDA 132 =====

General information
About our Sustainability Statement
PAGE 133 
Strategy, business model and value chain
PAGE 134–137
Stakeholder engagement
PAGE 138
Ratings
PAGE 138
Sustainability governance
PAGE 140–144
Materiality assessment
PAGE 145–147
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  61
SUSTAINABILITY  
GENERAL	INFORMATION	
ENVIRONMENTAL	INFORMATION	
EU	Taxonomy	Report	
Climate	change	
Pollution	
Water 
Biodiversity and ecosystems  
Resource	use	and	circular	economy	
SOCIAL	INFORMATION 
Own	workforce	
Workers in the value chain 
Consumers	and	end-users	
GOVERNANCE	INFORMATION 
Business conduct  
OTHER	INFORMATION 
THE SHARE 220
OUR HERITAGE 222
132
 VOLVO CAR GROUP  / SUSTAINABILITY

===== SIDA 133 =====

About our Sustainability Statement
General information and accounting  principles
This	Sustainability	Statement	covers	 Volvo	Cars’	operations	and	
 performance for the financial year 2025. It provides an overview of 
our sustainability strategy, governance, risk management and stake -
holder engagement. In addition, it includes information on material 
sustainability matters for our business, the monitoring of these 
 matter as well as the policies, actions and ambitions for each 
 sustainability matter identified as material in our double materiality 
assessment. 
The	Statement	is	prepared	in	accordance	with	the	Swedish	
Annual	Accounts	Act	Chapter	6,	European		Sustainability	Reporting	
Standards	(ESRS)	and	the	EU	Taxonomy	Regulation.	In	preparing	the	
Sustainability	Statement,	the	significance	and	relevance	of	sustain -
ability-related	information	are	assessed	to	ensure	that	the	disclo -
sures	provided	are	useful	and	decision -relevant	for	the	primary	
users	of	the	Statement.	These	assessments	are	made	on	a	
case-by-case	basis	for	each	datapoint	and	sustainability	matter,	
ensuring that the final set of disclosures reflects information that is 
material for the undertaking and relevant for users.
In	addition	to	the	disclosures	required	by	the	ESRS,	the	Statement	
includes	entity-specific	disclosures	that	provide	supplementary	
information relevant to the identified material sustainability mat -
ters.	These	disclosures	are	referenced	in	indexes,	found	on	page	
209,	together	with	the	applicable	ESRS	Disclosure	Requirements,	
the	phase-in	provision	applied	in	preparing	this	Statement,	and	
data	points	incorporated	pursuant	to	other	relevant	EU	legislation.	
Throughout	this	Statement,	we	use	the	term	ambition	instead	  
of	target,	which	is	the	terminology	prescribed	by	ESRS.	The	term	
ambition	carries	the	same	meaning	as	target	as	defined	in	ESRS.
Scope of the report
The report includes Volvo	Car	AB	(publ.)	and	its	subsidiaries.	
The scope for the report reflects the scope of the financial report. 
More information on the basis of preparation and consolidation 
can be	found	in	Note	1	in	the	notes	to	the	Consolidated	Financial	
Statements.	
The full value chain is considered when evaluating impact, risk and 
opportunity in the double materiality assessment, as well as how 
these are managed. The quantitative metrics disclosed in this 
	Statement	refer	solely	to	the	operations	of	 Volvo	Cars,	unless	
 otherwise specified. 
Sources of estimation and outcome uncertainties
Estimates	and	assumptions	are	required	in	some	quantitative	infor -
mation,	where	primary	data	is	unavailable,	including	some	Scope	3	
greenhouse gas categories and the share of recycled material in new 
car models. 
Environmental	information	for	our	operations	is	based	on	consoli -
dated	data	from	our	manufacturing	and	non-manufacturing	opera -
tions, some of which have a lag in data prepared. Due to this, estima -
tions are prepared for the missing periods up to 31 December, using 
actual	data	for	comparable	periods.	Estimations	are	subject	to	
 relevant impact factors, such as production volume variation. 
Further	information	on	reporting	methodology	and	how	judge -
ments, estimates and uncertainties are applied, can be found within 
each	section	of	this	Sustainability	Statement.	
Sustainability	is	a	core	component,	integrated	into	our	business	
and	investment	decision-making	processes.	The	monetary	
resources allocated for the implementation of action plans are, 
however, not allocated by individual components. Thus, we are 
	unable	to	separately	disclose	the	sustainability-related	resources,	
including	CapEx	or	OpEx,	for	these	action	plans.	
Changes in preparing the statement and restatements
During the year, we have enhanced our processes for preparing 
quantitative	information	included	in	the	Statement.	As	part	of	these	
improvements, we have restated certain historical figures to ensure 
consistency and comparability across reporting periods. More infor -
mation can be found on page 207. 
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  61
SUSTAINABILITY  
GENERAL	INFORMATION	
ENVIRONMENTAL	INFORMATION	
EU	Taxonomy	Report	
Climate	change	
Pollution	
Water 
Biodiversity and ecosystems  
Resource	use	and	circular	economy	
SOCIAL	INFORMATION 
Own	workforce	
Workers in the value chain 
Consumers	and	end-users	
GOVERNANCE	INFORMATION 
Business conduct  
OTHER	INFORMATION 
THE SHARE 220
OUR HERITAGE 222
133 VOLVO CAR GROUP  / SUSTAINABILITY / GENERAL	INFORMATION

===== SIDA 134 =====

CLIMATE ACTION
We aim to reach net zero greenhouse  
gas emissions by 2040
Our	ambition	to	reach	net	zero	greenhouse	gas	emissions	by	
2040	is	consistent	with	the	1.5°C	pathway	and	the	goals	of	the	
Paris		Agreement.	 
FOCUS AREAS
• Transform to pure electrification
• Minimise emissions from materials
• Minimise operational emissions
2025 AMBITIONS
• Reduce	CO 2 emissions by 30–35 per cent per car  
(from	a	2018	baseline):
• 50–60 per cent electrified car sales 
• 50 per cent reduction of tailpipe emissions per car
• 25 per cent reduction of emissions from materials per car
• 25 per cent reduction of operational emissions per car  
2030 AMBITIONS
• Reduce	CO 2 emissions by 65–75 per cent per car  
(from	a	2018	baseline):
• 90–100	per	cent	electrified	car	sales,	with	a	complete	line-up	  
of fully electric cars available
• 85–100 per cent reduction of tailpipe emissions per car 
• 30 per cent reduction of emissions from  materials per car
• 30 per cent reduction in operational emissions per car
• Science	Based		Targets	initiative	(from	a	2019	baseline)
• 60	per	cent	reduction	of	Scope	1	and	2
• 52	per	cent	reduction	of	Scope	3	(Use	of	sold	products)
CIRCULAR ECONOMY
We aim towards becoming a  
circular  business by 2040
By minimising primary material use, eliminating waste and  
pollution and growing circular business, we aim to significantly 
reduce our environmental impact. 
FOCUS AREAS
• Minimise primary resource use
• Eliminate	waste	and	pollution
• Grow circular business
2025 AMBITIONS
• 25	per	cent	recycled	and	bio-based	material	in	new	car	models
• Generate	one	billion	SEK	from	circular	economy	initiatives	  
(from	a	2018	baseline)  
2030 AMBITIONS
• 30	per	cent	recycled	and	bio-based	material	average	across	the	
fleet and 35 per cent for new car models
• >99 per cent recirculation rate
• 50 per cent reduction in water withdrawal per manufactured car 
in own	operations	(from	a	2018	baseline)
LONG-TERM BIODIVERSITY AMBITION
• Be net positive across our value chain and contribute to a nature 
positive future
RESPONSIBLE BUSINESS
We aim to protect and improve people’s lives  
in our value chain and wider society 
We strive to live our values and support a culture of responsible 
 business behaviour, at both a corporate and individual level, 
 throughout our value chain. 
FOCUS AREAS
• Ensure	employee	well-being
• Safeguard	human	rights
• Contribute	to	a	sustainable	society
2025 AMBITIONS
• Ensure	year-over-year	increase	of	share	of	women	in	senior	  
leadership
• Ensure	a	culture	of	inclusion	and	belonging	by	scoring	+1	compared	
to global benchmark in engagement surveys
• Injury	rate	(Lost	Time	Case	Rate)	for	employees	=<0.04
• Ensure	year-over-year	increase	in	the	number	of	sites	in	value	chain	
being assessed
• 100	per	cent	of	outstanding	debt	to	be	within	the	Green	Financing	
Framework	or	other	sustainability-linked	format
• EU	Taxonomy	alignment	50	per	cent	of	CapEx  
2030 AMBITIONS
• Achieve gender equity pay by 2027
• Women in senior leadership – share of 34 per cent
• Ensure	a	culture	of	inclusion	and	belonging	by	scoring	+3	compared	
to global benchmark in engagement surveys
• Injury	rate	(Lost	Time	Case	Rate)	for	employees	=<0.02
• EU	Taxonomy	alignment	70	per	cent	of	CapEx
Strategy, business model and value chain
OUR SUSTAINABILITY STRATEGY
Our	purpose	is	to	provide	people	freedom	to	move	in	a	personal,	sustainable	and	safe	way.	Sustainability	is	central	to	our	business	
and key to our future success. We are working to reach net zero greenhouse gas emissions, embracing the circular economy and 
conducting	business	responsibly.	Our	actions	help	address	global	sustainability	challenges	and	support	our	profitable	growth.	
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT  29
RISK 36
CORPORATE GOVERNANCE  42
FINANCIALS  61
SUSTAINABILITY  
GENERAL	INFORMATION	
ENVIRONMENTAL	INFORMATION	
EU	Taxonomy	Report	
Climate	change	
Pollution	
Water 
Biodiversity and ecosystems  
Resource	use	and	circular	economy	
SOCIAL	INFORMATION 
Own	workforce	
Workers in the value chain 
Consumers	and	end-users	
GOVERNANCE	INFORMATION 
Business conduct  
OTHER	INFORMATION 
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP  / SUSTAINABILITY / GENERAL INFORMATION
134

===== SIDA 135 =====