Why Luxury Automaker Volvo Is Cutting 3,000 Jobs? Know Key Reasons Behind It

Swedish luxury vehicle manufacturer Volvo Cars has announced job cuts to the extent of 3,000 as a direct result of the company's restructuring plan due to pressure of high costs, slowdown in electric vehicle (EV) demand, and uncertainty over trade tariffs.

Volvo Cars Chief Financial Officer (CFO) Fredrik Hanson reportedly said the move was crucial for the automaker to create a structurally more efficient and resilient” company.

Back in April, 205, the high-end vehicle producer, majorly owned by China's Geely Holding, on April 29 introduced a programme to cut down costs by 18 million Swedish crowns (USD 1.9 billion) and hit the brakes on investments, warning that redundancies were inevitable.

In the first quarter, the auto maker had 43,500 full-time employees and 3,000 staffing agency personnel, according to its earnings report.

In an official company statement, the reductions will primarily affect office-based positions in Sweden and represent around 15 per cent of the total office-based workforce globally.

"The automotive industry is in the middle of a challenging period. To address this, we must improve our cash flow generation and structurally lower our costs," CEO Hakan Samuelsson said.

As the group announced its cost cuts last month it also withdrew its financial guidance, pointing to unpredictable markets amid weaker consumer confidence and trade tariffs causing turmoil in the global auto industry.

On Friday US President Donald Trump threatened to impose a 50 per cent tariff on imports from the European Union (EU) from June 1, but on Monday he backed away from that date, restoring a July 9 deadline to allow for talks between Washington and Brussels.

Samuelsson on Friday told Reuters customers would pay a big part of any tariff-related cost increases, and that a 50 per cent levy could make it impossible to import one of its most affordable cars, the Belgium-made EX30 electric vehicle, to the US.