Volvo is initiating a new round of layoffs affecting 2,500 employees, which accounts for approximately six percent of its total workforce. This follows a previous reduction of 3,000 jobs earlier in 2026. The company intends to implement these cuts through the termination of consultant contracts, natural attrition, and voluntary exit packages, with full financial benefits expected by the end of 2027.
The decision follows a difficult third quarter in 2026, characterized by a nearly 50 percent year-over-year revenue decline in China and reduced profitability in the United States due to tariffs and the removal of consumer incentives. Volvo is shifting its strategy to prioritize profit margins over market share and plans to streamline global manufacturing across five dedicated plants.
To reduce development costs, the automaker aims to increase parts commonality with its parent company, Geely, from the current 10 percent to 30 percent by 2030. Additionally, Volvo plans to utilize spare capacity at its facilities in Ghent and Chengdu by offering contract manufacturing services to other automakers, potentially including partners within the Geely Group.
Despite cost-cutting measures, Volvo is developing 13 new vehicles, including seven for Western markets and six specifically for China. The lineup will feature both fully electric models and third-generation hybrids. A new design concept is scheduled for debut in 2027, the same year Klaus Zellmer will assume the role of president and CEO.
