The Swedish company is losing 1,400 white collar jobs and 600 blue collar jobs as part of the cost-reduction programme to save £334 million.
Most of the jobs are expected to be at Volvo’s head quarters in Gothenburg, Sweden.
Fredrik Arp, Volvo’s president, said: "This is an unfortunate but necessary action if we are to achieve a better financial position."
Volvo reported a loss of £76.1m in the first quarter of this year compared with a profit of £47.4m a year ago.
Volvo’s owner, Ford, did consider selling the Swedish brand when it sold off Aston Martin, Land Rover and Jaguar. However, Ford bosses have reiterated that Volvo is not up for sale.