Volvo Cars announced on Oct. 23 plans to eliminate 2,500 positions worldwide following a sharp decline in revenue and a steep operating loss in the third quarter. The company, owned by China’s Zhejiang Geely Holding Group, reported an operating loss of 5.6 billion Swedish kronor ($563 million) for July–September, a reversal from a $644 million profit in the same period last year. Global revenue fell 23% to $6.73 billion, while free cash outflow more than doubled to $895 million.
The job cuts are part of a broader restructuring effort, with 2,000 positions in Sweden and 500 elsewhere targeted for elimination. Volvo stated the reductions would include ending consultant contracts, natural attrition, and targeted exit packages for employees. The company did not provide a breakdown of how many reductions would affect existing employees versus consultants or specify the number of positions to be eliminated in China.
Third-Quarter Losses Drive Restructuring
Volvo’s financial performance reflected significant challenges in key markets. Revenue in China, one of its hardest-hit regions, nearly halved compared to the previous year, dropping by almost 50%. The company attributed the decline to intense pricing pressure from newer Chinese automakers, which intensified competition in the premium automobile market. Volvo CEO Håkan Samuelsson stated in an earnings announcement that the measures were necessary to reinforce the company’s turnaround plan.
In the U.S. market, Volvo cited tariffs and reduced customer incentives for electric vehicles as contributing factors to lower profit margins. The company also highlighted hypercompetition in China, where domestic brands have gained market share through lower prices and advanced vehicle technologies. Samuelsson told CNBC that the shift in consumer preferences toward domestic alternatives in China had occurred “faster than we thought.”
Strategic Shifts in Response to Market Pressures
Volvo outlined plans to adapt its business model to address these challenges. The company emphasized the need for a more regional structure in China, including regionally adapted cars and shared platforms with Geely. Samuelsson noted that developing key software, such as infotainment and driver-assistance systems, in China would be essential to remain competitive. “If you don’t have that, I think you cannot sell cars in China,” he said.
The automaker also announced a cost-cutting initiative aimed at reducing expenses by 5 billion Swedish kronor ($503 million). The restructuring follows a 24.2% plunge in Volvo’s share price on the Stockholm stock exchange, which touched a record low during trading. Shares closed at 10.70 Swedish kronor ($1.08) on Oct. 23.
Volvo, headquartered in Gothenburg, Sweden, has been under Chinese ownership since Geely acquired it from Ford Motor Co. in 2010. Geely currently holds nearly 79% of the company.