Instead, the Volkswagen Golf topped sales, according to the country's carmakers association.
The Golf made up 5.9% of new cars bought in the country. Volvo had a 5.7% slice of the sales, spread across three models.
The last time Volvo was not in the top spot was 1962 when a Volkswagen Beetle-headed the list.
Despite Volvo's car business now being owned by a Chinese firm, Zhejiang Geely Holding Group, it is still viewed as an iconic Swedish brand.
And it still has the largest share of the country's overall car market, with more than one in five cars (21.5%) on Sweden's roads, compared with Volkswagen's 15.7%.
The association said 2016 saw record car sales with 372,000 new registrations, up by 8% on the 2015 figure, helped by a strong economy.