ISTANBUL

Volvo is seeking to reduce its costs with an action plan worth around 18 billion Swedish krona ($1.8 billion) against the impact of US tariffs on the firm.

"To protect profitability and drive structural efficiencies on direct and indirect costs, as well as helping to offset external headwinds, the company has launched an accelerated cost and cash action plan," Volvo said on Tuesday.

The plan is expected to be realized in 2026, the firm said, adding that it includes variable cost actions and indirect spending efficiencies.

"The reductions in investments are in addition to the already planned lower investments going forward, as previously communicated," it said.

"As part of the action plan, there will be redundancies at its operations around the globe, but the company will come back with more details as soon as possible."

The firm stated that Volvo saw tougher market conditions and lower volumes combined with increased price pressure and tariff effects impacting profitability.

“The automotive industry is in the middle of a very difficult period with challenges not seen before,” said Hakan Samuelsson, Volvo Cars CEO.