STOCKHOLM, Sweden: Volvo Cars (VOLCARb.ST) cautioned that 2025 will be a challenging and highly competitive year, with weaker sales and profitability compared to 2024, sending its shares down 9.2 percent.

"We are going to see more turbulence," Volvo CEO Jim Rowan told Reuters following the release of the company's lower fourth-quarter profit. "We're going to see more hyper-competition, China will remain very, very competitive, and we'll start to see more competition in Europe."

The Geely-owned automaker is facing the same pressures as its industry peers-a sluggish European market, fierce EV price wars in China, and weaker-than-expected EV demand in the U.S. and Europe. Volvo is also dealing with tariffs on Chinese-made EVs, prompting it to shift production out of China.

With U.S. President Donald Trump threatening tariffs against Europe, Rowan told analysts that Volvo has the flexibility to ramp up production at its Charleston, South Carolina plant to mitigate the impact.

Volvo expects slower demand growth in 2025, with industry-wide price cuts making it "challenging to reach the volumes and profitability" of 2024.

Analysts reacted negatively to the forecast. Bernstein's Harry Martin said Volvo's outlook suggests "an annual result well below current sell-side consensus." Handelsbanken's Hampus Engellau described the fourth-quarter results as "soft."

Volvo's 2024 retail sales grew eight percent, aligning with its revised forecast after cutting its initial 12 to 15 percent growth outlook. In September, Volvo delayed its full transition to EVs, deciding to sell hybrids for longer than initially planned.

The company maintained its scaled-down 2026 target, including a profit margin goal of 7-8 percent.

For Q4 2024, Volvo posted an operating profit of 3.9 billion Swedish crowns ($357 million), down from 5.4 billion a year earlier. This included a 1.7 billion crown writedown related to its battery joint venture, Novo Energy.

Excluding joint ventures, operating profit stood at 6.3 billion crowns, down from 6.7 billion but exceeding expectations of 5.8 billion crowns.