Volvo Cars said Friday it plans to slash 2,500 jobs as a severe decline in its Chinese market weighed on earnings in the third quarter.

The Swedish automaker reported an operating loss of 5.6 billion Swedish Kronor ($563.7 million) in the third quarter, down from an operating profit of 6.4 billion Swedish Kronor in the previous period.

The company cited a deteriorating environment led by "tougher" market conditions in China and the U.S., which "negatively affected free cash flow."

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