Major car brand ‘facing challenging period' to axe 3,000 jobs in huge restructure to cut costs
A MAJOR car brand is facing a "challenging period," with a huge restructuring plan set to axe 3,000 jobs in a bid to cut costs.
The popular car manufacturer blamed rising costs, slowing demand for electric vehicles, and uncertainty over trade tariffs for its decision to cut jobs.
1
Volvo revealed that most of the job cuts will affect office-based staff in Sweden, which is around 15 per cent of its global office workforce.
The cuts will affect about 1,200 employees and 1,000 consultants, the automaker said.
CEO Håkan Samuelsson said the cuts would help improve the automaker's cash flow and reduce overall costs.
He added: "It's white collar in almost all areas, including R&D, communication, human resources.
"So it's everywhere, and it's a considerable reduction."
Fredrik Hansson, Volvo's new CFO, said that despite thousands of job cuts, the move would make the company 'structurally more efficient.'
Volvo's restructuring will cost an eye-watering £103million, which will impact its second-quarter results.
The popular car brand is introducing these sweeping cuts following reports of a 60 per cent dip in their first-quarter operating income.
Falling sales and revenues add pressure
The announcement follows a turbulent few months for Volvo, based in Gothenburg, Sweden.
Global deliveries slumped by 6 per cent in the first quarter of 2025 compared to last year, causing revenue to drop by 11.7 per cent, from £7.3bn to £6.4bn, according to Autocar.
Meet the new XC90 plug-in hybrid, an electric car with a backup plan
The automaker is facing what it describes as 'challenges not seen before' in the automotive sector, with rising costs, supply chain disruptions, and cooling demand weighing heavily on performance.
Former CEO Håkan Samuelsson, recently reinstated after Jim Rowan's exit, is leading the shake-up.
Samuelsson warned: "The automotive industry is in the middle of a very difficult period with challenges not seen before.
"We must get better at delivering results."
Investment cuts and uncertain forecasts
Volvo also revealed it is scaling back investments further, following a big drop in earnings before interest and tax, plunging from £370m to £120m year-on-year.
The company will stop providing financial forecasts for 2025 and 2026, saying market conditions remain too uncertain.
The cost-saving strategy includes a shift toward regionalised operations.
Volvo recently launched an updated S90 saloon exclusively for China and started building the EX30 electric crossover at its Ghent plant in Belgium, previously made only in China.
It also plans to sharpen its model range in the US and optimise production at its Spartanburg facility in South Carolina.
Samuelsson added: "While our strategy is clear, we must adapt quickly to survive.
"Our focus now is profitability, electrification and regionalisation.
Volvo's announcement follows a growing trend of major job cuts across the global automotive industry as companies brace for a tough market environment.
Audi also revealed plans to axe 7,500 jobs as part of a huge cost-saving drive.
The Volkswagen-owned manufacturer announced the cuts would be carried out at its German sites by 2029, aiming to save around €1 billion (£842.5 million) annually in the medium term.
The job cuts at Audi represent about 8.6 per cent of the brand's global workforce.
Audi said in a statement: 'The economic conditions are becoming increasingly tougher, competitive pressure and political uncertainties are presenting the company with immense challenges.'
The carmaker, headquartered in Ingolstadt, said the reductions would mostly affect areas such as administration and development.
Audi stressed that the cuts would be implemented in a "socially responsible" manner, avoiding compulsory redundancies.
Instead, roles will be reduced through natural attrition — meaning workers will not be replaced when they retire or leave the company.
Despite the cuts, Audi is investing heavily in its German operations, pledging €8 billion (£6.7 billion) over the next four years.
Part of the investment will go towards producing a new entry-level electric model at its Ingolstadt plant, with further developments considered for its second German site in Neckarsulm.
Audi's chairman Gernot Döllner said: 'We are setting Ingolstadt and Neckarsulm up to be robust and flexible for the challenging transition to electric mobility.
Audi must become faster, more agile, and more efficient. One thing is clear: this cannot be done without personnel adjustments.
Meanwhile, Audi's parent company Volkswagen announced back in December that it would cut 35,000 jobs at its VW brand sites across Germany by 2030.
The job reductions are part of the 'Future Volkswagen' agreement, hammered out with union representatives to help slash labour costs by €1.5 billion (£1.25 billion) per year.
Volkswagen emphasised that the job cuts would not involve any plant closures and would also be implemented 'socially responsibly'.
Volkswagen's plan also includes a significant capacity reduction, aiming to lower production volumes by around 734,000 units across its German manufacturing network.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
23 minutes ago
- Reuters
Russian court postpones hearing in $2.9 billion Rosatom-Fortum dispute until March
MOSCOW, June 11 (Reuters) - A Russian court on Wednesday postponed legal proceedings by more than nine months in a $2.9 billion lawsuit filed by Russia's Rosatom against Finland's Fortum ( opens new tab and Outokumpu ( opens new tab, court filings showed. State-controlled nuclear energy firm Rosatom is seeking 227.8 billion roubles ($2.9 billion) in compensation for losses over the termination of a contract for the Hanhikivi-1 nuclear power plant in Finland, court documents and a Rosatom statement showed in May. A hearing scheduled at the Moscow City Arbitration Court for Wednesday morning was postponed until March 16, 2026, court filings showed, without giving further details. Rosatom, Fortum and Outokumpu had no immediate comment. Rosatom and its former Finnish partners have been locked in dispute over the cancelled contract since May 2022. The Finnish side terminated the project soon after Moscow launched the conflict in Ukraine, citing significant delays and political risks. Rosatom in May said it was seeking compensation for losses caused by what it called the unlawful termination of the EPC contract to build the plant, violations of the shareholder agreement and other contractual disputes. Outokumpu has said it was never a direct party to the EPC agreement or any other agreement with any Rosatom company related to the Hanhikivi-1 project. Fortum said in May that the International Chamber of Commerce's decision that Rosatom's subsidiary could not make Fortum a party to proceedings was final. The contract to build the 1.2 gigawatt plant with investments estimated at 6.5-7 billion euros was signed in 2013 with Fennovoima, a joint consortium in which Finnish stakeholders including Fortum, Outokumpu and SSAB originally controlled two thirds through a joint venture, and the Russian side held one third. After the project's termination, Fennovoima ceased all its operations and is only engaged in legal disputes. ($1 = 78.6000 roubles)
Reuters
28 minutes ago
- Reuters
Report of defects at French nuclear reactor Civaux 2 lifts European power market
PARIS, June 11 (Reuters) - The price for front-year baseload power contracts in France climbed 8.3% to 68 euros ($77.76) per megawatt hour (MWh) on Wednesday, driven by a report of possible renewed stress corrosion at a nuclear reactor in central France. The increase sent the contract to a four-month high. French newspaper La Tribune on Tuesday reported that nuclear watchdog ASNR had identified "hints" of stress corrosion at the Civaux 2 reactor run by state-owned utility EDF. The watchdog did not immediately respond to a request for comment. EDF dealt with stress corrosion cracks in the same reactor less than three years ago, when corrosion in multiple reactors nationwide forced nuclear output in France to a 34-year low and sent prices skyrocketing. A spokesperson for EDF said an inspection was underway at Civaux 2 as part of annual maintenance and the utility does not yet have the results. Potential defects at the Civaux 2 site are causing concerns of another shock in the European power and gas markets, analysts and a trader said, as the return of stress corrosion could cause extended shutdowns. News of risk to the French fleet is the main driver for gas on Wednesday as there is just so much risk ingrained in the potential outages, a trader told Reuters. French nuclear operator EDF had to shut down some of its fleet in 2022 and 2023 after stress corrosion defects were found on the pipes of the safety system at multiple reactors, which contributed to a surge in power market prices at the time. The latest reports are "risking a revival of tensions on Europe's power market," analysts at DNB noted, while Mind Energy analysts attributed the rise in European gas markets and the European front-year baseload contracts to the same news. Benchmark European front-month gas contracts were also higher, up 1.7% at 35.4 euros/MWh. ($1 = 0.8745 euros)
Telegraph
34 minutes ago
- Telegraph
Winter fuel payment changes to unleash ‘chaos' on HMRC
Rachel Reeves's winter fuel payment about-turn could unleash 'chaos' on pensioners and the tax office, experts have warned. Under the new rules, the majority of pensioners will receive the winter fuel allowance but those earning more than £35,000 will have their payment clawed back through the tax system. Experts have said the policy, which will save an estimated £450m a year and cost around £1.25bn, could have unintended consequences such as: The £450m in savings could be wiped out due to the costs of administering the complex system. HMRC could claw back 'the wrong amounts' from pensioners due to out-of-date records. Customer service could suffer and tax dodgers could get off scot-free as HMRC's staff are moved away from regular work. Rachel Vahey, of stockbroker AJ Bell, said claiming back the payment from 25pc of pensioners was 'the most convoluted and difficult' route the Government could have chosen. She added: 'Given the chaos it could cause and the relatively tiny taxpayer savings on offer, it may have made sense for the Government to take the political embarrassment of a U-turn on the chin and make the payment to all pensioners.' Around two million pensioners earn more than £35,000 and will have the winter fuel payment claimed back through the tax system. For pensioners who file a tax return, this will be done via self-assessment. However, most pensioners are taxed through PAYE, which means the payment will be recovered through their tax code. Robert Salter, of accountancy firm Blick Rothenberg, said this could result in pensioners losing the winter fuel payment unfairly due to HMRC's 'out-of-date' records. 'Given that many people subject to the winter fuel payment won't be doing tax returns, there is a real risk that HMRC might be claiming back the wrong amounts – at least in some cases – as they have used the wrong underlying data,' he said. Former pensions minister Ros Altmann said she was also concerned about pensioners getting hit with incorrect bills relating to the winter fuel allowance. 'HMRC often makes mistakes and they warn that everyone needs to check the figures carefully to ensure the tax codes are correct. 'For many of the oldest pensioners, this is likely to be a massive challenge and, especially for those who are not digitally enabled, it could cause significant worry.' The Government's previous experience with means-testing does not bode well for the success of the winter fuel allowance system. Under the high-income child benefit system, which is also means-tested, the benefit is partially withdrawn once a parent earns more than £60,000. This means the parent must either opt out of receiving child benefit or file a tax return and pay it back. Over the years, many parents have been hit with unexpected tax bills because they do not know the rules or do not realise they have earned over the threshold. This has led to HMRC spending valuable time and resources policing the complicated system in order to claw back a relatively small amount of tax. Jon Greer, of wealth manager Quilter, said: 'The Government should learn lessons from the child benefit system and ensure it doesn't bake in unfairness from the outset. Getting that balance right is critical to avoiding the kind of unintended consequences that have plagued other means-tested benefits.' The Department for Work and Pensions has said it will set up a simple system so pensioners over the threshold can opt out of winter fuel payments. But even once this is up and running, there will be some pensioners who do not opt out because they do not realise they have earned more than £35,000 in one year. HMRC said taxpayers could check taxable income quickly and easily in the app or online via their personal tax account. Chancellor Rachel Reeves said the decision to reinstate winter fuel payments meant 'no pensioner on a lower income will miss out'. The about-turn comes as Sir Keir Starmer tries to shore up support from MPs and the public following losses to Reform at the local elections last month. A spokesman for HMRC said: 'No one will need to file a tax return just to pay back a winter fuel payment, and the vast majority will have the charge collected automatically through their tax code. 'HMRC has previous experience of introducing new processes at pace and doing so very successfully.'
