Volvo Car AB plans to cut about 7 percent of its global workforce, as the Swedish automaker reduces costs to meet a sluggish demand and to protect its profits.
The new policy will affect approximately 3000 positions, which includes 1000 consultants. Volvo announced on Monday. Volvo employs approximately 43,800 employees, with over half of which are in Sweden.
Volvo will be liable for cost of restructuring as high up to 1.5 billion Swedish Kronor ($140 million) that could impact the second-quarter earnings of the company.
The Chief Executive Officer Hakan Samuelsson is pushing through an expansive efficiency plan worth 18 billion kronor following the fact that Volvo announced a drop of 60% in its operating profit for the first quarter. The measures, which were announced earlier this month, are intended to stabilize the automaker while it battles increasing trade barriers and a varying demand for electric cars.
Volvo’s shares increased as much as 4.9 percent in Stockholm. The stock has fallen around quarter-times this year.
Samuelsson in interview on Friday denied concerns that the cuts could be interpreted as a sign that the automaker’s Chinese owner wanted to gain more control over the development of products and move the work for R&D in the direction of China. With a clear mandate by Zhejiang Geely Holding Group’s founder Li Shufu, 74-year-old Samuelsson is charged with ensuring tighter integration as well as generating synergies throughout the wider Geely group.
Volvo has just replaced the chief financial officer. He plans to provide those in the China as well as the US regions more autonomy in order to respond quicker to local customer preferences. The efficiency initiative that was announced earlier this month Volvo is aiming to cut costs for materials, staffing and investment.
The latest cuts affect 1,200 employees from Sweden and 1,000 positions that are being filled with consultants, the majority of them located in Sweden and the rest in other countries The company stated.
This move will be “critical for us to create a structurally more efficient and resilient” firm CFO Fredrik Hansson stated in an interview.
When the last time Volvo announced a reduction in workforce in 2023 when it stated that up to 1,300 jobs in the white collar industry in Sweden were in danger. In the end, the company cut approximately 700 positions as per a spokesperson who spoke to the media on Monday.
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