Volvo Cars, the Swedish automaker owned by China’s Geely Holding, announced a significant cost-cutting initiative on Tuesday, revealing plans to slash expenses by 18 billion Swedish krona (approximately $1.87 billion). This drastic measure comes on the heels of a sharp decline in first-quarter operating profit, which plummeted to 1.9 billion krona, a considerable drop from the 4.7 billion krona recorded during the same period last year.
The company attributed the disappointing financial results to several factors, including a planned inventory reduction in the final months of 2024, unfavorable currency exchange rates, and the overall instability within the global automotive industry. To address these challenges, Volvo outlined a comprehensive “cost and cash action plan.” This plan will involve substantial reductions in investments and, unfortunately, redundancies across its global operations.
While specific details regarding the number of job cuts remain undisclosed, Volvo promised to provide further information as it becomes available. The company also announced that it will no longer issue financial guidance for 2025 and 2026, reflecting the uncertainty of the current economic climate and the industry’s struggles. These financial difficulties come at a time of increased trade tensions, following the recent imposition of 25% tariffs on cars imported to the U.S. by the Trump administration, with additional tariffs on auto parts also anticipated.
Volvo CEO Håkan Samuelsson acknowledged the challenging environment, stating that the automotive industry is facing unprecedented difficulties. However, he emphasized the company’s strategic focus on three key areas: improving profitability, accelerating its electrification efforts, and enhancing regionalization strategies. The announcement underscores the significant headwinds facing the automotive sector, prompting Volvo to take decisive action to secure its future in a turbulent market.
