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‘Nationalize Volvo and Saab’: professor

Rolf Wolff, dean of the school of business at Gothenburg University, called on the government to nationalize Volvo Cars to safeguard the pool of knowledge on which the Swedish auto industry is based.i

'Nationalize Volvo and Saab': professor

“We all ought to take a moment to think about what would happen in Sweden if both Volvo Cars and Saab Automobile ceased to exist,” writes Wolff in Monday’s issue of business daily Dagens Industri.

“If Volvo Cars disappears as a base for industrial knowledge and skills, then Sweden will never again be a part of the auto industry. All the knowledge and skills would be lost, and with it all future associated development potential would be gone. Forever.”

The Swedish government on Monday ruled out any financial support for the country’s crisis-hit automakers Volvo Cars and Saab Automobiles until the intentions of their US parent companies became clear.

Ford-owned Volvo Cars and Saab, owned by General Motors, have seen sales plummet in recent months while their struggling parent companies have sought a bailout from the US government to stave off bankruptcy.

Enterprise Minister Maud Olofsson said the government sought to gain a clearer picture of the situation facing the two carmakers before any economic assistance was considered.

“What will Ford and GM do? Will Ford and GM move forward with Saab and Volvo? Will they develop new car models?” Olofsson told journalists.

“We could be a party to research and development. That is what several other governments are discussing,” she said, adding that other forms of direct aid were likely to run counter to EU competition legislation.

The comments came amid growing calls for the government to take action in support of the carmakers, seen as pillars of the country’s engineering industry and vital for the survival of a broad swath of suppliers.

The plight of the US “Big Three” automakers — Ford, General Motors and Chrysler — has led to scattered calls in Sweden for the government to consider taking over the carmakers that for decades have been standard-bearers of the country’s export-oriented industrial sector.

Volvo Cars is headquartered in Gothenburg, an important hub for the country’s industry on Sweden’s west coast.

VOLVO

Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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