Faced with headwinds, Volvo Cars is closing ranks. On Tuesday 29 April, the Swedish carmaker, owned by the Chinese company Geely, announced a savings plan worth SEK 18bn (€1.6bn), accompanied by job cuts around the world. The aim is to restore profitability, which has been seriously eroded by the crisis in the global automotive sector.
The first quarter set the tone: the group’s net profit plummeted by 73% to SEK 1bn (€91m), whilst group sales fell by 12%. CEO Håkan Samuelsson made no attempt to embellish these results. “The automotive industry is in the middle of a very difficult period with challenges not seen before,” he stressed, describing the results as “disappointing.”
To turn things around, Volvo is therefore launching this savings plan, the main effect of which will be felt in 2026. “Volvo Cars also sees a need to adapt to a more regionalised world,” said the manufacturer. “In the US, the company will sharpen the product line-up it needs for growth and how it can better use its existing manufacturing footprint there in the coming years--producing more cars where they are sold.”
Despite the turbulence, Volvo Cars is not deviating from its electric route. More than 43% of vehicles sold in the first quarter were already electrified, including almost a fifth that were 100% electric. Symbolic of this accelerated transition: the launch of the ES90, its new zero-emission car, and the inauguration of a production line dedicated to the EX30, its small electric SUV, at its plant in Ghent, Belgium, at the end of April.
“Over the last few weeks, I have worked with the management team and other colleagues on a plan to make the company stronger and more resilient. Whilst our strategy is clear, we must get better at delivering results. Given the turbulence in the market, we need to further improve our cash flow generation and lower our costs. Whilst we still have a lot to do, our direction going forward is focused on three areas: profitability, electrification and regionalisation,” concludes Samuelsson.
This article was originally published in .