Volvo Car CEO Insists R&D Direction Not Shifting to China
[Stay on top of transportation news: .]
Upcoming job cuts at Volvo Car AB are not a sign that the carmaker’s Chinese owner is taking more control over product development, CEO Hakan Samuelsson said.
“People worry Geely will centralize R&D in China. That’s a misunderstanding,” Samuelsson said in an interview in Stockholm on May 23. “There’s no such plan, and Chinese operations are also cutting costs.”
Volvo last month unveiled a plan for 18 billion kronor ($1.9 billion) in cost cuts, including thousands of job losses, meant to stabilize the company after an extended period of disappointing sales and model delays. The shake-up follows Samuelsson’s unexpected comeback as CEO in March. The 74-year-old has a clear mandate from its Chinese owner, Zhejiang Geely Holding Group Co.’s founder Li Shufu, to seek synergies across the group.
“It’s in Volvo’s interest to lower costs by sharing components and systems with Geely,” Samuelsson said. “There isn’t a single car manufacturer or brand in the world that can make every single component on its own. We have a unique opportunity to work much more closely with Geely than we may have done before.”
Shufu has signaled he aims to consolidate brands, eliminate redundancies and increase synergies within the group.
Still, tech restrictions, especially by the U.S., mean there are advantages of having research and development operations outside China, the CEO said.
“We must develop Western versions of software and hardware. Geely can’t do this for us,” he said. That includes minor changes to the EX30, Volvo’s smaller fully electric SUV that’s one of the best-selling electric cars in Europe right now, so that it becomes compliant with upcoming U.S. regulations on connectivity.
RELATED:Volvo Trucks North America Unveils VNR Tractor Redesign
The release of the new midsize EX60 model will happen next year “exactly as planned,” the CEO said, following a report by Dagens Industri that the fully electric SUV had fallen behind schedule.
The Gothenburg-based brand will “probably soon” announce “significant staff reductions especially on the white-collar side,” Samuelsson said, adding that in his view that won’t hurt the ability to develop new models.
“If we now make a staff reduction, it’s not going to jeopardize our output capability in any way,” he said. “On the contrary, you could prove that by looking at 2020. There were only 40,000 employees then and we still managed to launch a lot of cars that were developed from scratch.”
Want more news? Listen to today's daily briefing belowor go here for more info:
