Volvo Cars said its operating profit fell 84 percent in the first half, hit by tough competition and the global downturn.
Operating profit was 239 million Swedish crowns ($35.63 million) in the first six months compared with 1.53 billion in the same period last year, Volvo said on Wednesday.
Unit sales fell 4.1 percent to 221,309 cars.
"The economic uncertainties in most of our markets will remain for the rest of the year and competition is stiff," CEO Stefan Jacoby said in a statement.
Volvo plans to cut production by about 10 percent and reduce its staff by 200 to 300 people to take account of a slowdown in sales, a union official said last week.
The company has said in the past that it aims to increase sales by 2020 to 800,000 from just over 400,000 cars. That includes 200,000 cars in China, a leap from the 47,000 sold there in 2011.
Ford Motor Co. sold Volvo to China's Zhejiang Geely in 2010 for $1.8 billion.