Volvo Cars accelerates structural transformation for long-term growth

Volvo Cars is announcing plans to accelerate its transformation to effectively position the company for long term growth. As a result, it is giving notice for a reduction of 1,300 white-collar positions in its Swedish operations, plus a continued review and reduction of consultancy contracts. The exact nature and amount of job reductions will be decided over the coming months in negotiations with the unions. The company’s manufacturing operations will not be affected.

Volvo Cars aims to lead the transformation in areas such as online business, electrification, autonomous drive and new mobility models. While the company has invested and grown substantially in these areas, it now aims to reduce in non-focus areas to support further growth longer-term. The company also aims to become more agile and reduce hierarchies that are slowing down decision-making and execution.

Although the notices are part of the ongoing realignment of the company’s operations in line with its long-term ambitions and need for structural cost reductions, the coronavirus pandemic has increased the pertinence of the measures.

“The coronavirus pandemic is affecting us in the short term, but we expect volumes and growth to return,” says Hanna Fager, head of People Experience. “So we need to continue investing in our ongoing transformation and new business areas, by reducing structural costs.”

Volvo Cars was the first conventional car maker to commit to electrifying its entire line-up and phasing out cars only powered by an internal combustion engine. The company also established a new and still rapidly expanding battery development lab in Torslanda, an investment of approximately 600 million SEK. There are further multi-billion SEK investment plans in its Swedish operations to adapt its industrial footprint to new technologies, securing jobs in the long term.

Going forward, cars will also increasingly receive software and operating system updates over the air. Constant product improvement means that Volvo cars will keep evolving and upgrading over time, rather than being at their peak when they leave the factory. Volvo Cars also has the ambition to become a supplier of choice for global ride-hailing firms and aims to establish five million direct consumer relationships through new forms of mobility.

Volvo Car Group in 2019

For the 2019 financial year, Volvo Car Group recorded an operating profit of 14.3 BSEK (14.2 BSEK in 2018). Revenue over the period amounted to 274.1 BSEK (252.7 BSEK). For the full year 2019, global sales reached a record 705,452 (642,253) cars, an increase of 9.8 per cent versus 2018. The results underline the comprehensive transformation of Volvo Cars’ finances and operations in recent years, positioning the company for its next growth phase.

About Volvo Car Group

Volvo Cars was founded in 1927. Today, it is one of the most well-known and respected premium car brands in the world with sales of 705,452 cars in 2019 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding since 2010.

In 2019, Volvo Cars employed on average approximately 41,500 (41,500) full-time employees. Volvo Cars head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars head office for APAC is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium), South Carolina (US), Chengdu and Daqing (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China) and body components in Olofström (Sweden).

Under its new company purpose, Volvo Cars aims to provide customers with the Freedom to Move in a personal, sustainable and safe way. This purpose is reflected into a number of business ambitions: for example, by the middle of this decade it aims for half of its global sales to be fully electric cars and to establish five million direct consumer relationships. Volvo Cars is also committed to an ongoing reduction of its carbon footprint, with the ambition to be a climate-neutral company by 2040.