Major car maker to cut jobs as part of a £1.4bn cost-saving drive as tariffs and EV sales slump weigh heavy

By ROB HULL

Swedish car giant Volvo has announced it will embark on a £1.4billion cost-saving drive to 'offset external headwinds', which includes a decline in electric vehicle sales.

Among the cost-cutting measures includes axing jobs across its global network, it said as it confirmed its first quarter results on Tuesday.

The company, which is owned by Chinese giant Geely, said its 18billion Swedish krona-saving strategy will result in 'redundancies at its operations around the globe' from next year - though refused to provide any further details regarding locations and volume of jobs impacted.

It said the move will 'protect profitability and drive structural efficiencies on direct and indirect costs'.

The statement comes as legacy car makers face a perfect storm of economic issues, not least trade uncertainty triggered by Donald Trump, ongoing declining demand in China and a slowdown in EV appetite.

Volvo recently confirmed it had seen its year-on-year electric car sales plummet by a quarter in March, just days after it had brought back its former CEO to steady the ship.

Swedish car giant Volvo has announced it will embark on a £1.4bn cost-saving drive to 'offset external headwinds', which includes a decline in electric vehicle sales

Håkan Samuelsson was reappointed as chief executive on 30 March following the departure of Scotsman Jim Rowan after three years.

The Swede - who previously led the company for a decade - returns to the helm to head the company for the next two years at a turbulent time for the brand.

In the first financial quarter of 2025, Volvo's global deliveries dropped 6 per cent year on year to 172,000, resulting in an 11.7 per cent drop in revenue from £7.3billion to £6.4billion.

Volvo said the fall in wholesales was the result of a 'planned inventory reduction' towards the end of last year.

Håkan Samuelsson (pictured) was reappointed as Volvo Cars CEO on 30 March to steady the ship with a cost-saving plan

In March, it sold 70,737 cars worldwide - 10 per cent less than it did the same month of 2024, as sales of fully electric cars tumbled.

While total passenger car sales fell by 9 per cent in Europe, 8 per cent in the US and 22 per cent in China, its EVs suffered even greater losses. 

Sales of fully electric cars plunged 26 per cent to account for 19 per cent of deliveries (down from 21 per cent in March 2024).

Volvo is one of the car makers to have heavily invested in the EV transition, becoming one of the first manufacturers to offer an electrified version of every model in its range.

It has dramatically reduced the availability of conventional petrol cars and in April last year confirmed it had produced its final model with a diesel engine under the bonnet as it looked to embark on an ambitious plan to become an EV-only brand by 2030.

However, just months later in September it confirmed it had backtracked on the deadline due to a fall in demand for battery vehicles.

The company, which is owned by Chinese giant Geely, said its cost-saving strategy will result in 'redundancies at its operations around the globe' from next year - though refused to provide any further details regarding locations and volume of jobs impacted

It will instead aim for 90 to 100 per cent of its global sales to be either pure electric or plug-in hybrid by the end of the decade.

It attributed the change in policy to a 'slower than expected' rollout of charging infrastructure, the withdrawal of government incentives in some markets and 'additional uncertainties' created by increased tariffs. 

This week, it confirmed its earnings before interest and tax had dropped significantly from £370million to £120million.

It said that given external developments and increased uncertainties, it is no longer providing financial guidance for 2025 and 2026. 

Samuelsson said in the statement: 'The automotive industry is in the middle of a very difficult period with challenges not seen before. 

'Over the last few weeks, I have worked with the management team and other colleagues on a plan to make the company stronger and more resilient. 

'While our strategy is clear, we must get better at delivering results. 

'Given the turbulence in the market, we need to further improve our cash flow generation and lower our costs. 

'While we still have a lot to do, our direction going forward is focused on three areas: profitability, electrification and regionalisation.'

The announcement reiterated Volvo's 'firm ambition of becoming a fully electric car company', saying it will continue to be a 'leader in this transition'. 

Yet it said its plug-in hybrids will act as a 'pragmatic bridge for customers not yet ready to switch' to a full EV.

Profits for Volkswagen Group - which owns VW, Audi, Bentley, Porsche, Seat and other brands - slipped to 40% between January and March, which it attributed to a rise in sales of EVs with lower margins

The Volkswagen Group also confirmed on Wednesday that it had suffered a 40 per cent drop in profits during the first quarter of the year, which it blamed on the rise in EV sales and ongoing 'global volatile economic situation'.

Profits for the parent group of VW, Audi, Bentley, Porsche, Seat and other brands slipped to €2.19billion (£1.9billon) between January and March. 

This is despite a 1.4 per cent increase in deliveries to 2.13 million units, which resulted in sales revenue of €77.6million (£66million).

Some 10 per cent of global sales were EVs (20 per cent in Europe), with battery car deliveries up 64 per cent year-on-year.

However, due to their lower profit margins, an increase in EV sales had put 'pressure on result', according to chief financial officer Arno Antlitz.

Stellantis - the parent group of major brands including Citroen, Fiat, Peugeot, Vauxhall and others - recorded a 14% fall in revenues for the first three months of 2025, it said this week

Like Volvo, Stellantis this week has held back from publish a profit forecast for the 2025-26 financial year, citing the unpredictable impact of recent trade uncertainty, stating it would be difficult to estimate 'impacts on market volumes and the competitive landscape'.

The car giant - which owns the likes of Citroen, Fiat, Peugeot, Vauxhall and others - recorded a 14 per cent fall in revenues for the first three months of 2025, falling to just under €36billion (£30.6billion).

It attributed this to a reduction in vehicle pricing in key markets such as the US and Europe, owing to discounting, as well as a fall in shipments.

Volvo's cost-saving exploits come just a week after Nissan forecast a £4billion net loss in revised earnings for the fiscal year as it prepared to embrace huge cost-cutting measures to save it from the 'brink of collapse' as it endured a company-shaking sales slump in China and the US, its two biggest markets.