The Ford Motor-owned company blamed the exchange rate between the Swedish kronor and the dollar, increased competition and high steel costs.
About 1,000 to 1,500 jobs would be affected as part of the cost-saving drive, Volvo said.
Most of the cuts will come at Volvo's operations in Goteborg in southwestern Sweden, the company said.
Volvo Cars has 20,000 staff in Sweden and 8,000 in other countries, most of them in the US.
The decision to cut jobs comes a month after the group reported a near-40% increase in second-quarter profits to 3.9bn kronor (£284m).