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Volvo Cars is taking decisive action by launching a cost-cutting program and eliminating jobs to effectively counter the impact of U.S. import tariffs.
The Swedish carmaker Volvo, owned by Chinese carmaker Geely, has also withdrawn its financial forecasts for this year and next. The company is aiming for cost savings of more than 1.6 billion euros. Volvo did not disclose exactly how many jobs will be lost.
The major restructuring led by new CEO Håkan Samuelsson follows disappointing quarterly results. Volvo Cars sold fewer cars in the first quarter and saw profits fall sharply. In addition to the US import duties, Volvo is also struggling with declining demand for electric cars. Global trade tensions are also putting pressure on consumer confidence.
The U.S. trade tariffs are causing “huge disruption” for a global company like Volvo Cars, said Samuelsson, who returned to the top job this month. Samuelsson was brought back by Geely Chairman Li Shufu after a decade at the helm of Volvo until 2022.
Samuelsson stressed the need for lower costs and increased production in the U.S. because of the import tariffs. The company exports many vehicles from Europe to the U.S. Volvo Cars will pass on some of the tariff costs to consumers and take some for itself. The company will also increase production at its South Carolina plant. Most of the effects of the cost-cutting plans will be felt next year, Samuelsson said.
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