Volvo Cars is facing a tougher second half of 2026 than expected, with third-quarter sales falling 11% year-on-year to 141,609 vehicles as difficult conditions in China and a slower recovery in the US premium market weigh on demand.

The Swedish carmaker said industry volumes in China remained under “significant pressure”, with little sign of the market downturn easing.

Volvo also pointed to a slower-than-expected recovery in the US premium segment, adding to the challenges facing the company.

The latest figures come after Volvo had previously forecast significantly stronger sales during the second half of the year, alongside a strong improvement in free cash flow towards the end of 2026.

The weaker performance highlights the increasingly difficult environment facing established premium manufacturers as competition intensifies, particularly in China, where domestic brands continue to put pressure on international rivals.

Volvo is also preparing for a change at the top. The company announced last month that Klaus Zellmer, currently chief executive of Skoda, will become Volvo Cars’ CEO within a year as the manufacturer looks to revive sales and navigate an increasingly competitive global market.

The leadership change comes at a crucial point for Volvo, which is continuing to expand its electrified line-up while balancing slowing demand, intense competition and challenging market conditions.

With third-quarter sales now behind last year’s level and its earlier growth expectations under pressure, Volvo faces a demanding final quarter as it attempts to regain momentum and strengthen its position in the global premium-car market.