Volvo to axe a further 4,000 jobs

Volvo, the Swedish car brand owned by Ford Motor, said it was cutting 4,000 jobs in Sweden and overseas in the face of an industry downturn that its chief executive described as "more drastic than expected".

The carmaker announced 2,000 job cuts in June, and the cuts announced on Wednesday bring the total to 6,000, or about one-quarter of Volvo's global headcount.

The layoffs are the latest in a string of production or staff cuts in the industry announced by all of Europe's main carmakers, and now affecting plants across the continent from the UK and Spain to Italy and Poland.

General Motors said this week that it was halting or cutting shifts at most of its 10 plants on the continent.

Renault, Peugeot, Volkswagen, Ford, Daimler and BMW are all reducing production in response to falling vehicle sales, down 5 per cent in western Europe this year. Some are dismissing temporary or full-time staff.

The cuts at Volvo are especially deep as the brand is heavily exposed to the US, its largest market, where its sales have fallen by more than 30 per cent this year. The carmaker lost $271m (€198m) in the first two quarters of this year.

Volvo, with most of its costs in kronor, has no plants in the US. Premium cars have been hit especially hard by the credit crisis, which has depressed leasing sales and led consumers to postpone big-ticket purchases.

Stephen Odell, the brand's new chief executive, said last week his agenda was to "get Volvo back to sustainable profitability".

The jobs to be axed at Volvo will mostly go at its plant in Torslanda, near Gothenburg, where it makes large vehicles such as the XC70 and XC90 4x4 models.

However, some jobs will also be cut at the carmaker's plant in Ghent, Belgium, where it makes smaller cars, and at its overseas sales subsidiaries. About 1,200 of the total staff affected by the cuts are consultants on contracts.

Carmakers have been quicker than most other manufacturers to lay off or temporarily idle staff because of their reluctance to produce more vehicles than their dealers can sell, for fear of hurting their margins.

Volvo said that it expected its "new organisation" to be in place by the end of this year.

Mr Odell, a veteran of Mazda, the profitable Japanese carmaker Ford part-owns, took over as Volvo's chief on October 1.

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