Swedish car manufacturer Volvo Cars announced on Tuesday a cost-saving plan of 18 billion kronor (€1.6 billion), including job cuts, in response to declining profits and a struggling automobile sector.
The group, owned by China's Geely, reported a 73% drop in net profit to one billion kronor (€91 million) for the first quarter. Sales decreased by 12% to 82.9 billion kronor, the company statement revealed.
"The automotive industry is facing a very challenging period with unprecedented difficulties," said Volvo Cars CEO Håkan Samuelsson, describing the quarterly results as "disappointing."
To improve profitability, Volvo Cars will implement this 18 billion kronor cost-saving plan, with the main effects expected by 2026.
"Job cuts will occur in operations worldwide, but the company will provide more details as soon as possible," the statement added.
"Volvo Cars must adapt to a more regionalised world," the company emphasised, referring to the ongoing trade war, particularly between the United States and China.
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In the US, Volvo confronts increased tariffs on cars manufactured outside the country, with a 25% surcharge applied since early April.
"In the United States, the group will refine its product range and assess how to better utilise its existing production facilities in the coming years by producing more cars where they are sold," Volvo Cars explained.
Earlier in April, the CEO announced plans to increase the number of cars manufactured in the US and potentially transfer production of a new model to its South Carolina plant.
At the end of April, Volvo inaugurated a new production line for its small electric SUV, the EX30, at its factory in Ghent, Belgium.
