Volvo CEO: Chinese market is out of hand for Western automakers

The chief executive officer of Volvo Car AB stated that the market for Western-origin cars in China is rapidly disappearing. This led the Swedish automaker to increase layoffs, covering approximately 6 percent of its workforce.

This statement came after the news that Volvo made a loss in the third quarter. During the said period, while there was a general contraction in the Chinese market due to the spending crisis, Volvo's deliveries in China decreased by more than 40 percent as local brands dominated the field of electric vehicles.

"That era is over"

"No one can be successful anymore with the old formula where global cars developed in Europe are sold at high prices in China. That era is over," Chief Executive Officer Hakan Samuelsson said in a meeting with analysts on Friday.

Samuelsson admitted that he underestimated the rapid transformation in the Chinese auto market. The Swedish brand, which has been owned by the Chinese company Geely since 2010, will rely on the technologies and vehicle infrastructures offered by its Chinese parent company to compete in the future.

"In China, you need to have a presence with regionally developed products that have Chinese software. At this point, having the opportunity to develop these vehicles together with Geely is of course a great advantage for us," he said in an interview with Bloomberg.

Volvo's troubles came to light with the loss the company announced on Friday, which was much deeper than analysts had predicted. The manufacturer announced cost-cutting plans aiming to achieve savings of 5 billion kroner ($504 million).

In addition to the problems in China, Volvo drew attention to the costs arising from customs duties in the USA and the removal of incentives for electric vehicles there. In a bid to get back on track, the company plans to launch seven new vehicles for Western markets and six models specifically tailored for China by the end of the decade.