Volvo Cars will dismiss around 1,000 employees in Sweden as part of its global cost reduction program. The company's chief financial officer confirmed the cuts in an earnings presentation. This follows the automaker's earlier announcement to eliminate 3,000 white-collar positions worldwide.
The layoffs come despite Volvo reporting better-than-expected third quarter results. The company posted a profit of 6.4 billion Swedish kronor, up from 5.8 billion in the same period last year.
CEO HĂĄkan Samuelsson acknowledged the positive results but noted ongoing challenges. "Despite positive third quarter results, we still face several challenges including continued price competition and tariff effects," Samuelsson wrote in the quarterly report.
The savings program has already yielded faster reductions in variable and indirect costs than planned. The company stated these staff reductions will be completed during the fourth quarter.
Vehicle sales actually declined 7% during the third quarter to 160,500 cars compared to the same period last year. Revenue dropped to 86.4 billion kronor from 92.8 billion a year earlier.
However, the company's EBIT margin improved to 7.4% from last year's 6.2%. The automaker appears to be prioritizing profitability over sales volume in the current economic climate.
These job cuts reflect the tough balancing act facing traditional automakers. They must invest heavily in electric vehicle transition while maintaining profitability in their conventional operations.