China-connected drivers Volvo Cars, the Swedish automotive manufacturer in which China’s Geely Holding has a controlling stake. They launched an extensive restructuring plan to reduce costs and address the long-term issues plaguing the industry. The company released the full action plan on April 29. It will eliminate approximately 3,000 positions globally, with half of the layoffs coming in Sweden, including a third in Gothenburg.
The purpose of the restructuring is to reduce costs and the undertaking would cut about 1,200 jobs in Sweden. It cuts more than 1,000 consulting jobs, largely within the US. The balance of the layoffs will be shared among all other international markets in which the company operates. This decision is a segment of a larger strategy to ease business operations. We need to start making money, especially with trade tariffs continuing to suck profit out of the automotive industry.
Volvo Cars has further pulled its profit guidance for 2025 and 2026. The company cited uncertainty over trade tariffs as a key factor in their decision to move. They made clear just how much the changing nature of global trade is hitting an already vulnerable auto industry. With its high level of globalization and dependence on manufacturing bases in North America, Volvo Cars faces significant challenges in maintaining profitability.
Håkan Samuelsson, president and CEO of Volvo Cars, said in a statement on the action plan and he made it clear that it’s time to make these changes happen.
“The actions announced today have been difficult decisions, but they are important steps as we build a stronger and even more resilient Volvo Cars,” – Håkan Samuelsson
Samuelsson stressed the need to improve cash flow generation and cut operations costs.
“To address this, we must improve our cash flow generation and structurally lower our costs. At the same time, we will continue to ensure the development of the talent we need for our ambitious future,” – Håkan Samuelsson
The announcement of an 18 billion Swedish kronor ($1.89 billion) cost and cash action plan late last month reflects Volvo Cars’ commitment to adapting to these challenging market conditions. The impacts of tariffs and trade policy have created uncertainty for the automotive industry. In order to succeed in this new environment, companies such as Volvo Cars need to put a focus on being efficient and sustainable.