Sweden's Volvo Cars said Monday it would cut 3,000, mostly white-collar jobs, or around 15% of its office-based workforce, as part of a $1.9 billion cost-cutting plan announced last month amid tough market conditions.
The layoffs come as the Swedish automaker tries to resurrect its rock-bottom share price and drum up better demand for its cars by restructuring part of its business and cutting costs.
The carmaker, owned by Chinese group Geely, said the cuts were aimed "to build a stronger and even more resilient Volvo Cars at a time when the automotive industry is facing considerable challenges in its external environment."
Of the 3,000 jobs to be cut, around 1,200 were in Sweden, as well as 1,000 consultants primarily based in the Nordic country, Volvo Cars said.
"The automotive industry is in the middle of a challenging period. To address this, we must improve our cash flow generation and structurally lower our costs," the company's chief executive, Hakan Samuelsson, said in a statement.
Samuelsson, who was recently brought back to the role after heading the company for a decade until 2022, unveiled a program in April to slash costs by 18 billion Swedish crowns ($1.9 billion), including a substantial cut to its white-collar staff, who make up 40% of its workforce.
"It's white collar in almost all areas, including R&D, communication, human resources," Samuelsson told Reuters on Friday, "So it's everywhere, and it's a considerable reduction."
"I think it will be very healthy, and will save us money and give space for people to (take on) bigger responsibilities."
Volvo Cars' new CFO, Fredrik Hansson, told Reuters that while all of its departments and locations would be impacted, most of the redundancies will happen in Gothenburg.
Announcing the cost-cutting plan in April, he said Volvo Cars had to adapt to a "more regionalized world," referring to the trade war between China and the U.S.
The Swedish group is having to cope with higher tariffs on cars made outside the United States, subject to a 25% tariff since early April.
With most of its production based in Europe and China, Volvo Cars is more exposed to new U.S. tariffs than many of its European rivals, and has said it could become impossible to export its most affordable cars to the U.S.
Volvo Cars announced in early April that it would increase its production in the United States and would probably produce an additional model there.
It also inaugurated a new production line at its factory in Ghent, Belgium, in late April, dedicated to its small electric SUV EX30.
The company said in a press release that it would finalize a new structural setup by the autumn of this year.
Handelsbanken analyst Hampus Engellau said the number of staff to be laid off was in line with expectations and that the company's move to streamline its operations was positive.
As a result of the job cuts announced Monday, Volvo Cars said it expected to incur a one-time restructuring cost of up to 1.5 billion kronor ($158 million), booked on its second-quarter report.
At the end of December 2024, the company had around 42,600 full-time employees.
