The changes in the Chinese automotive market have forced European car companies to rethink their business strategies.
Volvo Car’s CEO Håkan Samuelsson said in an interview with the American consumer news and business channel CNBC that the pace of change in the Chinese market is faster than expected. Models that were developed in Europe for global sales are now struggling to adapt to the Chinese market, affecting Volvo and other Western car companies.
He said that Volvo's sales performance in China has dropped significantly, which is one of the main reasons for the decline in the company's profitability.
"In the past, we usually shipped global-developed cars to China for sales and secured considerable brand premiums. Consumers also favored these car models. But now the situation has changed."
He pointed out that Chinese consumers are turning to domestic brands, and the competitiveness of Chinese automakers has also significantly increased. International brands that wish to continue operating in the Chinese market must develop new strategies.
According to him, Volvo is promoting further localization of its operations in China. This includes giving regional teams more autonomy, developing models that meet local needs, and leveraging Geely’s general platform to reduce costs.
The very important point is that we need to develop software, information entertainment systems, and advanced driver assistance and autonomous driving systems in China. He claimed, "If we can't do this, I believe it will be impossible to sell cars in China."
He also stated that the market for traditional Chinese luxury fuel vehicles is shrinking, and there is little expected improvement in the next year. However, this does not mean that related models will completely withdraw from the market.
Volvo has launched the XC70 model in the Chinese market, and plans to introduce two more models developed specifically for the local market next year. He said that these new cars will be competitive with Chinese domestic brands in terms of cost and software. "If you will accept that, they will be more 'Chinese-made' than the global models."
Regarding the company's announced layoff plan of about 2,500 employees, he explained that as Volvo strengthens regional business autonomy, the headquarters needs to streamline its management structure and adjust the staffing levels in sales management and research and development departments.
