By Marie Mannes
STOCKHOLM (Reuters) – Volvo Cars announced cost cuts of 18 billion Swedish crowns ($1.87 billion) on Tuesday, withdrew its earnings forecast for the next two years and said it would restructure its U.S. operations as its first-quarter profit tumbled, sending shares down over 10%.
Volvo is one of the most exposed European automakers to U.S. tariffs as it ships most of the cars it sells in the United States from Europe.
The automaker’s shares have plunged to record-low levels in recent months as it grapples with mounting tariff pressures, a continued slowdown in electric vehicle (EV) demand and global uncertainty.
Volvo’s “cost and cash action plan” will include layoffs and deeper cuts in investment than previously expected, the company said, with the majority of its effects expected in 2026.
First-quarter operating profit at Volvo, majority-owned by China’s Geely, fell to 1.9 billion Swedish crowns from 4.7 billion crowns a year earlier.
The latest cost-cutting is led by new CEO Hakan Samuelsson, who previously headed Volvo for a decade and was unexpectedly brought back earlier this month after the company axed former CEO Jim Rowan.
The plan seeks to save 5 billion crowns in “indirect spend efficiencies”, which would include job cuts.
Volvo did not specify how many and what kinds of jobs would be affected, but Samuelsson said white-collar jobs would definitely be affected since the carmaker aimed at streamlining its organisation and possibly merging various functions.
“We need to be more efficient in our white-collar areas, need to slim down the organisation … work smarter, and that of course will lead to a reduction of personnel,” he told Reuters.
Samuelsson also said he intended to lean more on owner Geely for at least 3 billion crowns of the action plan, including sharing material costs and using more of its suppliers.
“It would be a waste not to be utilising these synergies that are really unique for our company,” he said.
Volvo’s U.S. operations will now have a new head and the automaker will create a new region called the Americas.
“We’re going from being a global company, having global products and shipping cars back in forth over the borders, that seems to be gone,” the CEO said. “Let’s create stronger, more autonomous regions in China and in the U.S.”
That would include China and the United States potentially having models outside Volvo’s global lineup.
“People have different tastes and preferences in the region, so I think you need to accept that,” he said.
Samuelsson reiterated his plan to expand production at Volvo’s Charleston, South Carolina, factory, adding a new model alongside the electric EX90 currently made there.
He said the new vehicle would likely be a “conventional plug-in hybrid car” or a mid-size SUV.
While Volvo has been ahead of some competitors with electrification, its profit margins have come under pressure as EV prices have fallen, while tariffs and competition have increased.
But Samuelsson said Volvo has no choice to stick to its electrification strategy.
“There is no way out of this,” he said. “To refrain from selling them (EVs) and sell petrol cars that would also not be a very smart solution.”
($1 = 9.6177 Swedish crowns)
(Reporting by Marie Mannes, editing by Terje Solsvik and Tomasz Janowski)
