According to reports on July 7th， following Volvo’s announcement of a global layoff of 3，000 employees， its Chinese workforce has also received layoff notices.
These reports indicate that Volvo has recently implemented layoffs within its China operations， primarily affecting employees at the Shanghai Technical and R&D Center. The affected positions reportedly include those in engineering， research and development， and supply chain management. The severance packages offered are generally consistent with N+3 months’ salary， where N represents the number of years of service.
It is understood that as early as May of this year， Volvo announced global layoffs as part of its recently launched cost and cash action plan. This initiative， valued at 18 billion Swedish Kronor (approximately 1.9 billion USD)， aims to streamline the organization and reduce its cost base structurally， resulting in the elimination of around 3，000 positions across Volvo Cars’ global operations. It is evident that the layoffs in China are part of this organizational streamlining effort.
The underlying reason for these workforce reductions appears to be Volvo’s continued struggle with challenging business performance， marked by declines in operating profit and sales volume.
In its latest financial report， Volvo disclosed that its operating profit for the first quarter was 1.9 billion Swedish Kronor (approximately 143.2 million USD at current exchange rates)， a significant decrease from the 4.7 billion reported in the same period last year， representing a year-on-year decline of 59.5%. The company sold a total of 172，219 new vehicles in the first quarter， a 6% drop compared to the previous year.
In addition to the downturn in financial performance， recent US tariff policies on automobiles have also posed a considerable challenge to Volvo’s long-term strategic planning.
Currently， the European Union faces a 25% import tariff imposed by the United States on automobiles， steel， and aluminum， along with a 10% “reciprocal” tariff on most other goods. Volvo Cars CEO， Jim Rowan， has previously stated that if tariff-related costs increase， consumers will bear the brunt of these additional expenses. He also highlighted that a potential 50% US tariff on European vehicles could effectively exclude Volvo’s most affordable model， the EX30 electric vehicle， from the US market entirely.
Under this tariff pressure， Volvo Cars has stated that the current layoff measures are necessary to ensure the company can achieve its long-term strategic goals. Despite these challenges， Volvo remains firm in its ambition to become an all-electric automotive company.
