Sweden's Volvo Cars on Thursday posted stronger-than-expected third-quarter profit, prompting shares to rally by around 40% and putting the stock on track for its best-ever trading day.

Volvo Cars, which is owned by China's Geely Holding, posted operating income for the July-September period of 6.4 billion Swedish kronor ($680.4 million), well above analysts' expectations and up from 5.8 billion kronor a year earlier.

Its margin on earnings before interest and taxes (EBIT) came in at 7.4% for the third quarter, compared to 6.2% in the same period last year.

Volvo Cars said the result was largely driven by its ongoing 18 billion kronor cost-saving program , as well as certain one-off items.

The Stockholm-listed stock price jumped as much 41% on Thursday morning, before paring gains

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