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VOLVO CAR GROUP results presentation second quarter 2018 Hans Oscarsson, Senior vice president finance & CFO Patrik Tolf, Deputy CFO & head of Group Finance Nils Msko, vice president & Head of investor relations DISCLAIMER By


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VOLVO CAR GROUP results presentation second quarter 2018

Patrik Tolf, Deputy CFO & head of Group Finance Hans Oscarsson, Senior vice president finance & CFO Nils Mösko, vice president & Head of investor relations

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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

  • f 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

  • pinions 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.

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

DISCLAIMER

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Financial Summary Q2 2018 BNSEK 66.0

(+27%) Revenue

BNSEK 4.2

(+29%) ebit

6.4%

Ebit margin

3

170k

(+15%) units

mSEK 3,700

Operating & investing cash flow

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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Comparable period: April – June 2017 Europe is defined as EU + EFTA

US +34%

27,539 units

China +15%

32,712 units

EUROPE +6%

85,036 units

Global growth +15%

170,232 units Suv share 55%

retail Sales Q2 2018

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VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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highlights

 US plant inaugurated –global structure completed  New S60 launched – SPA completed  XC40 capacity increase

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VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

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Financials

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VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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key financial developments

Net revenue (MSEK) Retail sales (units) EBIT (MSEK)

14% 15%

YTD18 317,700 YTD17 277,700 Q218 170,200 Q217 148,500

24% 27%

YTD18 122,900 YTD17 99,400 Q218 66,000 Q217 52,000 3,290

15% 29%

YTD18 7,840 YTD17 6,800 Q218 4,250 Q217

6.3% EBIT margin 6.4% EBIT margin VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

Net income (MSEK)

18% 40%

YTD18 5,600 YTD17 4,750 Q218 3,000 Q217 2,140

Investments (MSEK)

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Free cash flow (MSEK)

900

  • 800
  • 3,200

YTD18 YTD17 Q218 3,700 Q217 9,650

  • 17%
  • 23%

13,900 YTD18 16,800 Q218 YTD17 7,430 Q217

6.8% EBIT margin 6.4% EBIT margin
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Net revenue Q2 2018

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MSEK

Other 2,600 Sales Mix and Pricing 3,600 Volume 7,800 Q2 2017 52,000 Q2 2018 66,000

+27%

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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XC 55% V 29% S 16% Other 15% US 16% China 19% Europe 50%

Retail sales by carline Q2 2018 Retail sales by carline Q2 2017

Retail sales by carline and region q2 2018

Retail sales by region Q2 2018 Retail sales by region Q2 2017

Other 13% US

14%

China 19% Europe 54% XC 47% V 37% S 16%

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VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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ebit improvement q2 2018

VOLVO CAR GROUP RESULTS PRESENTATION JANUARY-DECEMBER 2016

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2016 3,290 2017 4,250

Volume increase Sales mix positive Cost & Other

6.3%

EBIT margin

6.4%

EBIT margin

+29%

MSEK

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* Change in inventories, accounts receivables and accounts payables, **Adjusted for interests and other items, *** Adjusted for exchange on cash

2,800 15,900 47,800 29,100 7,600 2018 Q1 Liquidity

  • 200

EBITDA

  • 3,700

Working capital* 6,100 Investments** 13,600 Financing*** 38,900

400

52,900 2018 Q2 Liquidity

Undrawn credit facilities Cash Marketable securities

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MSEK Free cash flow MSEK 3,700

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

Cash Flow movements Q2 2018

Net cash position of SEK 14.4bn (Q1 2018 SEK10.4bn)

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R&D Expenses (SEKbn)

2 4 6 8 10 12 LTM Q2 2018 9.5 4.1% 2017 10.2 4.9% 2016 10.2 5.7% 2015 8.8 5.4% 2014 7.2 5.2%

R&D expenses % of Revenue

Investments (SEKbn)

32.7 6.0 17.0 9.7 15.7% 2016 25.6 6.1 13.1 6.4 14.3% 2015 18.9 5.5 8.7 4.7 11.5% 2014 18.6 4.8 8.6 5.2 13.6% 5.3 14.7 9.8 LTM Q2 2018 29.8 2017 12.8%

Non capitalised R&D Intangible investments Tangible investments % of Revenue

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Investments and R&D

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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Liquidity & debt – improved net cash position

14,400 28,000 Debt 24,900

22,700

2,200 Liquidity 52,900 38,900 400 13,600

Long-term Debt Short-term Debt Cash & Cash Equivalents Marketable Securities Undrawn Credit Facilities

MSEK Net cash position of SEK 14.4bn (Q1 2018 SEK10.4bn)

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VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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Balanced Amortisation schedule

210 420 420 750

420 420

2021 7,600

5,230 2,370

2020 3,540 2019 1,560 2018 2018 June 30 52,900 2026 2025 5,650

5,230

2024 2023 2022 3,420

3,000 Bonds Loans Liquidity

MSEK

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Loans 43% Bonds 57%

Funding by type

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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Looking ahead

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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2018 - outlook

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Continued strong growth and maintained strong profits Upside from renewed product portfolio Strong foundation for our longer term ambitions

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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Questions

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VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018
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NEW ERA AS AN INDEPENDENT, STANDALONE COMPANY UNDER GEELY OWNERSHIP

Zhejiang Geely Holding Group acquires Volvo Cars 2010 2013 Volvo Cars unveils the all-new XC90, the first product on the SPA platform 2014 Volvo Cars achieves new record unit sales of 503k and improved profitability 2015 Further footprint optimisation, new plant in US Initiation of strategic repositioning Commencement of the largest investment programme in the Company’s history 2011

2010 – 2015 PHASE I “STRATEGIC TRANSFORMATION” 2016-2020E PHASE II “PROFITABLE GROWTH”

Introduces new generation powertrains 2016 Volvo Cars another record year of sales 534k and earnings SEK 11bn Enters into the debt capital markets Launch Polestar – pure progressive performance Launch new XC60 and XC40 (new segment entry) 2017 First OEM to commit to fully electrified fleet New ways to consumers: Care By Volvo subscription based ownership 30% stake in Lynk & Co

Volvo Cars’ Transformation

6.9% 2013 9.0 7.4% 2012 12.0% LTM Q2 2018 2017 26.2 8.1 6.5% 16.0 9.8% 2014 9.5 27.9 12.5% 2016 21.5 12.0% 2015

EBITDA margin, % EBITDA, MSEK

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

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Another year of strong growth

Net revenue (SEKbn)

VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

232 211 179 164 138 50 100 150 200 250 13.9% LTM Q2 2018 2017 2016 2015 2014

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Net Revenue CAGR

10 20 30 40 29.8 9.8 5.3 14.7 LTM Q2 2018 2017 32.7 6.0 17.0 9.7 2016 25.6 6.1 13.1 6.4 2015 18.9 5.5 8.7 4.7 2014 18.6 4.8 8.6 5.2 Non capitalised R&D Tangible investments Intangible investments

Investments (SEKbn) Retail sales (Thousand)

CAGR

612 572 534 503 466 200 400 600 800 7.1% LTM Q2 2018 2017 2016 2015 2014

Retail sales

EBIT (SEKbn)

5 10 15 20 +44% LTM Q2 2018 15.1

6.5%

2017 14.1

6.7%

2016 11.0

6.2%

2015 6.6

4.0%

2014 2.1

1.5%

EBIT % margin CAGR

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SLIDE 20 VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018

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