Volvo cuts jobs despite rising sales, more could follow

Volvo car will lay off 6% of its workforce in Sweden as the company continues to cut costs.

All those fired were white-collar workers. At this stage, it’s not clear which departments are hardest hit and whether there will be any cuts in the company’s R&D or technical staff.

To date, 1100 redundancy notices have been issued to Volvo’s workforce.

In a statement, Volvo CEO Jim Rowan noted that “cost actions we initiated last year have already begun to bear fruit in a number of key areas, such as materials costs.” “.

He justified this latest round of job cuts by stating, “Economic headwinds, rising raw material prices and increased competition are likely to remain a challenge for our industry in the coming years. a time”.

Volvo also says it will “reduce costs and improve efficiency worldwide”. [our] global operations in the coming months”, signaling further job cuts are imminent, with the company’s operations outside Sweden to be put under the microscope.

The automaker will tighten its financial belt by reducing the amount it spends on consultants and “purchased services.”

However, it is very important to point out that “jobs in the production line…will not be affected during this period”. The company currently operates six factories around the world: Gothenburg in Sweden, Ghent in Belgium, South Carolina and three factories in China (Chengdu, Daqing and Taizhou).

It’s unclear how much money the automaker will save by eliminating these jobs in Sweden. When asked about this by ReutersRowan replied, “We’re still working on that in detail.”

The redundancy at Volvo occurred despite increased sales. Year-to-date (January-April), Volvo’s global sales have grown by 10% to 214,914 vehicles.

Pure electric vehicles grew 137% to 38,899 and accounted for 18.1% of total sales. Plug-in hybrid variants fell about 5% to 49,132, or 22.9% of the total.

Overall, Recharge models (PHEV and EV) accounted for 40.9% of total Volvo vehicle sales.

Europe remains the automaker’s largest region (93,475, up 10%) and accounts for more than half of all electric vehicles (26,475) and PHEVs (31,576) sold by the company.

China (49,000, up 11%) and the US (36,094, up 10%) are Volvo’s largest single markets.

Despite strong sales gains, the automaker’s profit margin fell in the first quarter of 2023, with EBIT (earnings before interest and taxes) falling to 5.3% from 8.1 percent in the same period last year.