VOLVO Cars will cut 3000 jobs, mainly white-collar workers, as part of a restructuring aimed at overcoming rising costs, a slowdown in EV demand and uncertainty over trade tariffs.

The cuts – about 1200 employees and 1000 consultants – will primarily affect office-based positions in Sweden and represent about 15 per cent of the total office-based workforce globally, Volvo said.

Volvo also said that the 50 per cent tariffs planned to be imposed on vehicles imported into the US from Europe and China would “make it impossible” to sell its cheapest model, the EX30, in the US.Volvo planned the car to sell for $US35,000 in the US. When faced with the 100 per cent tariff on Chinese-made products (the EX30 is made by Volvo parent Geely in China), Volvo organised for the EX30 to be built for export at its plant in Belgium. Production started in April.

The price for an entry-level Belge-built EX30 is now $US46,195, compared with the possibility of the Chinese-made price of close to $US58,000.

Speaking of the employee cuts, Volvo CEO Hakan Samuelsson said: “The automotive industry is in the middle of a challenging period. To address this, we must improve our cash flow generation and structurally lower our costs.”

Reuters reported that Mr Samuelsson said: “It’s white collar in almost all areas, including R&D, human resources, and communication. So it’s everywhere, and it’s a considerable reduction.”

“I think it will be very healthy, and will save us money and give space for people to (take on) bigger responsibilities,” he said.

Volvo’s new CFO Fredrik Hansson said that while all of its departments and locations would be impacted, most of the layoffs will happen in Gothenburg.

“It’s tailored to make us structurally more efficient and how that plays out might vary a bit depending on the area. But no stone is left unturned,” Mr Hansson said.

Volvo Luqiao Plant China

Volvo will incur restructuring costs of as much as 1.5 billion Swedish crowns ($A243m) that will impact the company’s second-quarter results.

The layoffs were not unexpected. Bloomberg reported that Volvo, which is majority-owned by China’s Geely Holding, was planning to push through sweeping cost cuts after reporting a 60 per cent plunge in first-quarter operating income.

On April 29, Volvo announced it would have to slash costs and reduce investments, warning that layoffs were inevitable.

Bloomberg said that in the first quarter, the automaker had 43,500 full-time employees and 3000 staffing agency personnel, according to its earnings report.

Volvo last month withdrew its financial guidance, pointing to unpredictable markets amid weaker consumer confidence and trade tariffs causing turmoil in the global auto industry.

US president Donald Trump last week threatened to impose a 50 per cent tariff on imports from the European Union from June 1. He later backed away from that date, restoring a July 9 deadline to allow for talks between Washington and Brussels.

Volvo Manufacturing China

The back down eases – for now – a major headache for Volvo. With most of its production based in Europe and China, Volvo is more exposed to new US tariffs than many of its European rivals.

Mr Samuelsson earlier said that customers would pay a big part of any tariff-related cost increases, and that a 50 per cent levy could make it “impossible” to import one of its most affordable cars, the Belgium-made EX30 electric vehicle, to the US.

Fredrik Hansson

Volvo is particularly hit by the proposed tariff. Vehicles from other car-makers with lower price tags, including Ford Motor, General Motors and Toyota, are imported to the US from Mexico, South Korea or Japan, putting their price points at risk in the face of tariff uncertainty.

Mr Samuelsson said he was hopeful that Europe and the United States will soon come to an agreement despite the threat of rising tariffs.

“I believe there will be a deal soon. It could not be in the interests of Europe or the US to shut down trade between them,” he said.

Most of Volvo’s vehicles for the US market, which last year accounted for 16 per cent of group sales, are imported from Europe.

The company aims to increase production at its Charleston, South Carolina factory in the near term by adding a new model, which Mr Samuelsson has previously said could be a mid-sized plug-in hybrid.