ISH car maker Volvo, owned by Chinese group Geely, detailed dramatic cost cuts yesterday as part of its bid to become profitable again within the next two years.
Chief executive Hakan Samuelsson, said the firm would need to slash costs by over 1bn Swedish kronor (£95.6m) to enable it to break even.
Earlier this month, the car maker said sales fell 6.1 per cent last year, including double digit drops in China and Sweden and a small rise in the United States. And it warned that it expected a tough 2013.
The six per cent drop in sales means “considerable cost cutting is required to counter that, especially when you consider that we didn’t even start at a break-even point,” Samuelsson told The Wall Street Journal.
Samuelsson also said that except for investments in long-term product development, cuts across the company’s operations are on the table, from marketing and consulting contracts to other administrative functions.
Volvo, bought from Ford Motor by Zhejiang Geely Holding for $1.8bn in 2010, aims to spend about $11bn to double total annual sales to 800,000 cars by 2020 and boost sales in China to 200,000, from only 41,000 last year, which was a drop of 10.9 per cent.