Sales slumber prompts 1,000 Volvo job cuts

Volvo Cars said on Wednesday it was preparing to axe 1,000 mostly white-collar jobs as car sales in Europe have fallen to a two-decade low.

Sales slumber prompts 1,000 Volvo job cuts

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.

TT/The Local/at

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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.