Volvo Cars said on Friday it plans to cut 2,500 jobs after a sharp decline in its Chinese market hit its third-quarter profits. The Swedish automaker reported an operating loss of 5.6 billion Swedish crowns ($563.7 million) in the third quarter, down from an operating profit of 6.4 billion Swedish crowns in the previous period. US, which “negatively affected free cash flow.” Volvo Cars shares last fell about 27%. “It’s really a lot about the Chinese market, of course, where the change has come faster than we thought, and we can really now see that selling global cars developed in Europe and China is not going to work, and then this is affecting all the Western players in China,” Volvo Cars CEO Håkan Samuelsson told CNBC on “Squawk Box Europe” on Friday. Chinese consumers are now looking for “domestic alternatives,” which have become stronger and more competitive, the CEO said. “We need a new strategy in China… it has to be a more regional structure, a more empowered region, and we need regionally adapted cars.” He added that costs need to be competitive and that Volvo Cars needs to share some platforms with its Chinese parent company Geely and develop key software in China including infotainment and driver assistance systems. “If you don’t have that, I think you can’t sell cars in China.” Volvo Cars’ revenue in China fell almost 50% year-on-year as premium brands faced “hypercompetition” from new Chinese rivals, which also put heavy pressure on prices, the company said. Meanwhile, in the United States, the automaker cited the negative effects of tariffs and fewer incentives for customers to buy electric cars, putting pressure on profit margins. Volvo Cars said it is seeking to cut 5 billion Swedish crowns in costs and will cut 2,500 jobs globally, of which 2,000 will be in Sweden. “It’s really a consequence of this development, our long-term strategy,” Samuelsson told CNBC. “We will have more empowered and stronger regions, and then, of course, you cannot maintain the same resources at the corporate central level. Therefore, we need a more agile central administration.”
