Volvo Cars saw its sales shrink by 18 percent in January 2013, and on Wednesday CEO Håkan Samuelsson told Sveriges Television (SVT) staff cuts were in the works as part of an effort to save money at the company.
The Sweden-based carmaker, which is owned by Chinese automaker Geely, already slimmed down its organization by 1,100 jobs in the autumn of 2012.
"We have to adapt to reality. We've done that on the work floor, now we have to do it in the offices," Samuelsson told SVT.
Car sales are depressed across the EU. There haven't been so few cars sold in January since the industry organization Acea started collecting sales figures in 1990, SVT noted.
Auto industry subcontractor association FKG fear Volvo's 1.5 billion kronor ($237 million) cost reduction programme will hit consultants hard.
"There are many smaller consultancy companies in Gothenburg with 20 to 40 employees where many work with Volvo," CEO Fredrik Sidahl told SVT.
He warned that some companies would face bankruptcy if the Volvo contracts dried up.
Union representatives, meanwhile, responded to the news by saying that Volvo Cars owner Geely Holding should step in and inject cash.
"Our new owners need to step up to the plate and prove they are serious about long-term investing in Volvo," Magnus Sundemo, spokesman for the Volvo chapter of Akademikerklubben told SVT.
The company's CEO said instead that it was time for the company to stand on its own two feet.