Volvo Cars has indicated that its sales are set to improve significantly in the second half of the year, supported by growth in the European market and a recovery in the United States.

The Swedish automaker, which is controlled by China's Zhejiang Geely Holding Group, stated on Friday that the overall Chinese vehicle market weakened in the first half, compounded by increased global macroeconomic uncertainty due to conflicts in the Middle East.

The company noted that the U.S. market, after several consecutive months of declining sales, is now showing signs of recovery, with sales increasing month-over-month in both May and June.

"As the negative impact from the reduction of subsidies gradually fades, we anticipate the recovery trend in the U.S. market will continue into the second half of the year," the company said.

Volvo completed a cost-reduction program totaling 18 billion Swedish kronor (approximately $1.87 billion) last year and initiated a new round of efficiency measures at the beginning of this year, aiming to cut an additional 5 billion kronor in costs. The company disclosed on Friday that this additional cost-saving plan has been completed six months ahead of schedule.

In addition to the expected sales recovery in the latter part of the year, Volvo forecasts it will generate a substantial positive free cash flow in the later months of the second half, with the full-year cash flow expected to be roughly breakeven.

Previously, the company provided guidance projecting vehicle sales growth for the current year and a significant improvement in full-year free cash flow compared to 2025.