Volvo Cars shares slump after adding 2,500 job cuts to turnaround plan

what happened

Shares of Volvo Cars plunged in early Stockholm trading after the carmaker said it would eliminate another 2,500 jobs, roughly 6% of its workforce. According to Dow Jones Newswires, the company is widening its turnaround plan, which targets 5 billion Swedish kronor (about $504.5 million) in savings on top of earlier measures. Most of the reductions will come from ending consultant contracts, natural attrition and targeted exit packages, and 2,000 of the roles are based in Sweden.

Chief Executive Hakan Samuelsson said that with "severely challenged volumes" the plan must be reinforced to lower the break-even point and improve cash flows. The company also reported an adjusted pre-tax loss of 3.7 billion kronor for the third quarter, wider than the 758 million kronor loss expected by FactSet. Revenue fell 23% to 66.9 billion kronor.

why it matters

Sharp declines in China, where revenue has almost halved, and weak U.S. demand amid tariffs leave the business exposed. The company has also scrapped its full-year guidance, and deliveries of the EX60 model will be delayed.

market impact

Volvo Cars and European autos: weaker outlook and soft sales pressure the company's shares

tags

instruments