Volvo to eliminate around 2,000 jobs after third-quarter sales drop 5%

Swedish auto major Volvo today said that it will eliminate around 2,000 jobs after third-quarter results showed a five-per cent drop in sales.

''As part of the previously announced Group-wide efficiency program, a directional decision has been made to rationalise white collars in staff and support functions by approximately 2,000 employees and consultants,'' the Gothenburg-based company said in a statement.

The job cuts comprise a large part of its earlier announced Group-wide efficiency program where it had estimated to incur restructuring costs of approximately SEK 5 billion.

Volvo, which makes, trucks, buses, engines and construction equipment, said in the third quarter, net sales decreased by 5 per cent to SEK 64.9 billion ($10.2 billion) compared to SEK 68.3 billion in the third quarter of 2012.

Operating income was SEK 2,502 million, excluding restructuring charges of SEK 104 million.

Olof Persson, president and CEO, said, ''The Volvo Group's third quarter was characterised by the ongoing comprehensive product renewal in the Group's truck program and the fact that we entered a new phase of the Group's development focused on taking actions to streamline and enhance the efficiency of our operations. The product renewal is the largest in the history of the Volvo Group.'' 

Looking ahead, Persson said, "Over the coming two years we will furthermore work hard to increase productivity and cost efficiency in line with what we have set out in the strategic plan for 2013-2015."