Shares in Volvo Cars plunged on Friday after the carmaker reported rapidly deteriorating sales, slashed 2,500 jobs and said intensifying competition in China would force drastic changes on European carmakers. Volvo's bleak outlook in China wiped out more than a quarter of the Swedish company's market value. The job cuts, which make up 6 percent of Volvo's work force and mostly affect employees in Sweden, follow about 3,000 cuts announced last year.
Volvo has joined other European carmakers, including Volkswagen and BMW, in reining in its ambitions in China, the world's biggest auto market. Sales in the country fell by almost half in the latest quarter as conditions worsened faster than anticipated, the company said in reporting its latest financial results. "Nobody will be successful with the old recipe where you had global cars developed in Europe and sold them at a premium price" in China, Volvo's chief executive Hakan Samuelsson said on a call with analysts. "Those times are gone." Volvo, which is majority owned by China's Geely but based in Sweden and listed on the Stockholm exchange, said tariffs and the removal of incentives for electric cars in the United States, another critical market, added to the pressure. The company also warned more cost cutting could be ahead.
However, Volvo said that the European electric vehicle market has provided some stability in an otherwise turbulent time. "Electrification is now really speeding up, and we are in the lead in the premium segment," he said. Mr. Samuelsson, who is preparing to hand the reins of Volvo by next October to Klaus Zellmer, a former executive at the Czech carmaker Skoda, said the company was cutting jobs and costs even more deeply and lowering research and development spending in response to the downturn.
Source: New York Times Business · Summarized by HeadlinesBriefing