Volvo Cars said Friday it will cut 2,500 jobs after reporting a third-quarter operating loss of 5.6 billion Swedish kronor, about $563.7 million.
By the numbers: The 5.6 billion kronor operating loss compares with an operating profit of 6.4 billion kronor in the previous period. Shares finished the session 24.2% lower.
- Of the 2,500 positions going, 2,000 sit in Sweden. The company is targeting 5 billion kronor in cost reductions.
Zoom in: Revenue in China fell almost 50% year on year as premium brands ran into what Volvo called hypercompetition from new Chinese rivals, which also put severe pressure on pricing.
What they're saying: "It's really a lot about the Chinese market, of course, where the change has come faster than we thought," chief executive Hakan Samuelsson told CNBC's Squawk Box Europe on Friday.
- "Selling global cars developed in Europe and China will not work, and then this is affecting all the Western players in China," Samuelsson said.
Between the lines: Samuelsson said Chinese consumers are turning to domestic alternatives that have grown stronger and more competitive, and that Volvo needs a more regional structure with regionally adapted cars.
- He added that Volvo must share some platforms with Chinese parent Geely and develop key software in China, including infotainment and driver-assistance systems.
Yes, but: China was only part of it. Volvo also cited tariffs in the US and fewer customer incentives to buy electric cars, which squeezed margins, and said the deteriorating environment hit free cash flow.
Why it matters: Volvo is the clearest reading yet on how quickly Western carmakers are losing ground in the world's biggest car market, and the cost of that retreat is landing in Sweden rather than in China.
