Gothenburg: Volvo is taking strategic steps to mitigate the impact of US tariffs by unveiling a comprehensive cost reduction plan valued at approximately 18 billion Swedish krona ($1.8 billion). The company aims to protect its profitability through structural efficiencies in both direct and indirect costs, while counteracting external pressures.

According to Anadolu Agency, Volvo announced on Tuesday that the accelerated cost and cash action plan is designed to address the challenges posed by current market conditions. The plan, which is set to be fully realized by 2026, focuses on variable cost reductions and enhancing indirect spending efficiencies. The company emphasized that these efforts are in addition to previously communicated plans for reduced investments.

Volvo also indicated that the action plan would involve redundancies across its global operations, with further details to be provided in due course. The firm is grappling with tougher market dynamics, characterized by lower volumes, increased price competition, and the adverse effects of tariffs on profitability.

"The automotive industry is in the middle of a very difficult period with challenges not seen before," remarked Hakan Samuelsson, CEO of Volvo Cars, highlighting the unprecedented nature of the current challenges faced by the industry.