VOLVO CAR GROUP RESULTS PRESENTATION SECOND QUARTER 2019

HANS OSCARSSON

CHIEF FINACIAL OFFICER

PER ANSGAR

VP GROUP REPORTING

THERESE JANDÉR

HEAD OF INVESTOR RELATIONS

By accepting this document, the person to whom it is provided (the “Recipient”) agrees to be bound by the following obligations and limitations.

This document has been prepared and issued by Volvo Car AB (together with its subsidiaries, “Volvo Cars”).

The information contained in this document is derived from sources that have not been independently verified. Except in the case of fraudulent misrepresentation, no responsibility or liability is accepted by Volvo Cars or by any of its respective officers, employees, affiliates or agents in relation to the accuracy, completeness or sufficiency of any information contained herein or any other written or oral information made available by Volvo Cars in connection therewith or any data which any such information generates, or for any loss whatsoever arising from or in connection with the use of or reliance on this document and any such liability is expressly disclaimed. Analyses and opinions contained herein may be based on assumptions that, if altered, can change the analyses or opinions expressed. This document speaks as of the date hereof and in providing this document, Volvo Cars gives no undertaking and is under no obligation to provide the Recipient with access to any additional information or to update this document or to correct any inaccuracies in it which may become apparent. Volvo Cars’ past performance is not necessarily indicative of future results and nothing contained herein shall constitute any representation or warranty as to future performance of Volvo Cars or any security, credit, currency, rate or other market or economic measure. Nor does this document constitute a recommendation with respect to any securities.

DISCLAIMER

Volvo Car Group Results Presentation January- June 2019 2

XC40 in Luqiao

• Capacity increase and benefit from local production

• High demand has exceeded our expectations

• Three car models on a single production line (CMA)

Battery deal with Asian suppliers

• Battery supply for future cars secured with CATL and LG Chem

• Major step towards realizing 2025 electrification ambition

Uber car

• First production ready car, capable of autonomous drive

• Developed together with Uber

• Part of Volvo Cars’ ambition to be the partner of choice for ride-hailing companies

Volvo Car Group Results Presentation January- June 2019 3

OPERATIONAL HIGHLIGHTS Q2 2019

Strong growth and market share gains

Sales volume +5.4%

Continued price pressure and additional tariffs

Revenue +1.7%

Operating income SEK 2.6bn

Free cash flow MSEK 1,600

Cost actions taken

Volvo Car Group Results Presentation January- June 2019 4

FINANCIAL HIGHLIGHTS Q2 2019

CHINA+15.7%37,855 Units

EUROPE+3.5%88,029 Units

US+1.9%

28,062 Units

GLOBAL +5.4%179,506 Units

GLOBAL SALES DEVELOPMENT Q2 2019

Comparable period: Apr – Jun 2018Europe is defined as EU28 + EFTA

OTHER +2.5%25,560Units

Volvo Car Group Results Presentation January- June 2019

5

Retail sales by carline

61%

13%

29%

16%

55%

26%

Q2 2018 Q2 2019

170,232179,506

+5%

S V XC

Retail sales by market

Q2 2018

21%

15%14%

16%

50%

16%

19%

170,232

49%

Q2 2019

179,506+5%

USOther China Europe

Q2 2019 SALES DISTRIBUTION

Volvo Car Group Results Presentation January- June 2019 6

FINANCIALS

Volvo Car Group Results Presentation January- June 2019 7

Net revenue (MSEK)Retail sales (units)

EBIT (MSEK)

Q219Q218 H118 H119

340,800

170,200 179,500

317,600+5%

+7%

Q219Q218 H119H118

66,000 67,200

122,900 130,100+2%

+6%

4,200

Q218 Q219 H119H118

7,800

2,600

5,500-38%

-29%

6.4%3.9%

Net income (MSEK)

Q218 Q219 H118 H119

3,0001,400

5,600

3,400

-53%

-39%

Capex (MSEK)

Free cash flow (MSEK)

850

Q218 Q219

-2,800

1,600

H118 H119

3,600

5,500

Q218 H119

5,700

Q219 H118

11,200 11,100-4%

-1%

6.4% 4.2%

KEY FINANCIAL DEVELOPMENTS Q2 AND H1 2019

Volvo Car Group Results Presentation January- June 2019 8

Net revenue (MSEK)

600

Volume, sales mix and pricing

-2,600

Q2 2018 Sales of licenses

1,700

Foreign exchange rates

Q2 2019

1,500

66,000

Other

67,200

NET REVENUE AND EBIT WALK Q2 2019

500

100

Q2 2018 Q2 2019Sale of licenses

-500-1,100

Volume, sales mix

and pricing

Government grants

-600

Foreign exchange

rates

Other

4,200

2,600

EBIT (MSEK)

• Revenue increase mainly driven by China, UK and Germany

• Positive volume mainly driven by XC40

• Increasing pricing pressure

• Lower government grants

• Net exchange rate effects6.4%

3.9%

Volvo Car Group Results Presentation January- June 2019 9

Net revenue (MSEK)

300 900

Volume, sales mix and pricing

H1 2018 Sales of licences

4,000

Foreign exchange rates

2,000

Other H1 2019

122,900

130,100

NET REVENUE AND EBIT WALK H1 2019

500

Volume, sales mix

and pricing

-500

H1 2018

-500

Sale of licenses

-1,400

Government grants

OtherForeign exchange

rates

-400

H1 2019

7,800

5,500

EBIT (MSEK)

• Revenue increase mainly driven by China, UK and Germany

• Positive volume and sales mix mainly driven by XC40

• Increasing pricing pressure

• Increase in license sales YoY

• Lower government grants

• Net exchange rate effects6.4%

4.2%

Volvo Car Group Results Presentation January- June 2019 10

35,100

13,500

2019 Q1 Liquidity

2,700

6,500

EBITDA

3,600

Other**

-2,900

Working capital*

3,500

-5,500

Investments Financing***

13,700

4,200

40,300

2019 Q2 Liquidity

51,300

58,200

CashUndrawn credit facilities Marketable securities

MSEK

Free cash flow MSEK 1,600

CASH FLOW MOVEMENTS Q2 2019

Volvo Car Group Results Presentation January- June 2019 11

* Change in inventories, accounts receivable and accounts payable, ** Interest, tax and changes in other items, *** Adjusted for exchange on cash

• Seasonal working capital changes, including:• Higher inventory due to

sales growth and expanding business

• Higher receivables on the back of sold licenses

• Investments mainly relates to capacity increase, new car models and technology

• Financing net of new bondsand repayment of maturing debt

EBITDA

13,300

13,300

1,600

40,200

Financing***2018 Q4 Liquidity

-7,500

Working capital*

Other** Investments

2,900

13,700

4,200

40,300

2019 Q2 Liquidity

55,10058,200

2,500

-11,100

Undrawn credit facilities Marketable securities Cash

MSEK Free cash flow MSEK -2,800

CASH FLOW MOVEMENTS H1 2019

Volvo Car Group Results Presentation January- June 2019 12

* Change in inventories, accounts receivable and accounts payable, ** Interest, tax and changes in other items, *** Adjusted for exchange on cash

• Seasonal working capital changes, including:• Higher inventory due to

sales growth, expanding business and change in logistics flow

• Higher receivables on the back of sold licenses

• Investments mainly related to capacity increase, new car models and technology

• Financing net of new bonds, repayment and dividend during Q1

R&D Expenses (SEKbn)

2018

5.2%

2014

5.9%

20172015 2016

5.7%4.9%

LTM H1 2019

4.8% 5.2%

10.2

7.2

9.510.2

12.1

13.5

% of Revenue R&D expenses

Capex (SEKbn)

10.1%

8.6

5.2 4.7

8.5%

9.2

10.8%

6.4

13.1

2016

8.5%

12.8%

9.7

17.0

2017

22.1

LTM H1 2019

2015

8.7%

8.5

26.7

13.6

2014 2018

9.4

12.7

13.913.8

19.5

22.1

% of Revenue

Intangible investments

Tangible investments

CAPEX AND R&D

Volvo Car Group Results Presentation January- June 2019 13

29,400

2,600

Liquidity

4,200

40,300

13,700

Debt

58,200

32,00012,500

26,200

Undrawn Credit Facilities

Long-term Debt

Marketable Securities

Short-term Debt

Cash & Cash Equivalents

MSEK

Net cash position of SEK 12.5bn(Q1 2019 SEK 11.9bn)

LIQUIDITY & DEBT

Volvo Car Group Results Presentation January- June 2019 14

200

5,700

2020 2021

400

3,000

2022

400

2,000

2023

1,100

6,4002,400

2025

400

5,300

2026

58,200

1,200

4,000

7,800

3,400

7,500

2019 June 30

5,300

2,500

2019 2024

MSEK

68%

32%

Bonds

Loans

Funding by type

AMORTIZATION SCHEDULE

Liquidity BondsLoans

Volvo Car Group Results Presentation January- June 2019 15

COST REDUCTIONS

Staff reduced by 750 people

Cost reduction in bought services

Planned actions to lower cost run rate by SEK 2bn

Further actions will reduce costs into 2020

Volvo Car Group Results Presentation January- June 2019 16

H1 2019 H2 2019 H1 2020

SEK 1bn

SEK 1bn

2019 H2 - OUTLOOK

Continued growth in sales

Continued pressure on margins

Additional cost reductions of 1 + 1 billion SEK

Strengthened profit vs H2 2018

Volvo Car Group Results Presentation January- June 2019 17

Volvo Car Group Results Presentation January- June 2019 18

Q&A

Longer Term Ambitions

Direct consumer relationships >5 million

Subscription with recurring revenue 50%

Pure electric cars 50%

Autonomous cars 30%

Naturally hedged global production

Superior growth

Premium OEM profitability

Volvo Car Group Results Presentation January- June 2019 19

Capturing new mass market consumer group

(30%)

A market leading AD/ADAS software

developer

(50%)

Spearheading electrification

Solutions and services for smarted mobility

My car sometimes

Strong brand with the premium segment

Robotaxi

Wholesale business (50%)

Subscription services

My car always

Care by VOLVO

A NEW STRUCTURE FOR THE FUTURE

Strategic affiliatesThe Volvo Car Group

Direct consumer business Direct consumer business

Volvo Car Group Results Presentation January- June 2019 20

Volvo Car Group Results Presentation January- June 2019 21