Volvo has announced it will eliminate 3,000 jobs, primarily administrative positions, as part of a restructuring driven by a pervasive climate of uncertainty.
Volvo explained it's facing high production costs, a slowdown in global demand for electric vehicles (even as sales continue to grow), and a climate of uncertainty created by tariffs and the trade war launched by the U.S. administration.
The reductions will primarily affect office jobs in Sweden. These cuts represent approximately 15 percent of the company's total global administrative workforce, Volvo confirmed today.
“The automotive industry is going through a challenging period. To address this, we must improve our cash flow and structurally reduce our costs,” said Volvo CEO Hakan Samuelsson in a statement.
Volvo expects to incur $140 million USD in restructuring costs, which will impact the company's results during the second quarter of the year, from April to June.
Volvo, majority-owned by Chinese group Geely, is implementing extensive cost reductions after recording a 60-percent drop in operating profit in the first quarter of the year (January to March).
On April 29, the company began preparing everyone for the worst by announcing it would have to proceed with job cuts. Also in April, Volvo withdrew its financial forecasts, citing market unpredictability in a context of lower consumer confidence, partly due to customs tariffs that are plunging all manufacturers and markets into uncertainty.
Another clear demonstration of that uncertainty came in the last few days, Last Friday, President Trump threatened to impose 50-percent tariffs on imports from the European Union starting June 1. Today, that was pushed back to July 9 to allow for discussions between Washington and Brussels.
Volvo, with the majority of its production based in Europe and China, is more exposed to US tariffs than many other automakers.
Hakan Samuelsson stated on May 23 that customers would bear a large portion of the cost increases related to tariffs, and that a 50-percent tariff could make it impossible to import the company's new model, the Belgium-manufactured EX30 electric SUV into the United States.