Volvocar reconsidering strategic growth moves and cloud over the economy gets darker

Wednesday, 20 June 2012
Uncertainty and reduced sales is forcing Volvo Car Corporation to revise its ambitious development plan of Skr75 billion. The company has realised that its finances are strained, and are thought to need a substantial injection of capital.

Media reports hold that declining sales figures in creating anxiety at Volvo Cars Corporation. During period January – May Volvo Cars' sales fell by 3.6 percent from the same period last year, to more than 179 000 cars. The largest decline was in Sweden, while China is the only market where sales are rising.

Sales forecast for the rest of the year does not point to any improvement, quite the contrary. Now Volvo Cars is slowing down and will take down the volume as such it will kill parts of the development plan the company had carved, a source told the Swedish business saily Dagens Industri.

Volvo Car Corporation's financial position are forcing at least a temporary slowdown in the development plan of Skr75 million, of which half would go from products and half from other part of the industry.

Volvo Cars, which is owned by Chinese Zhejiang Geely Holding, are thought to need a substantial injection of capital. The company's earnings are not sufficient for a loan of up to Skr40 billion. The principal owner Li Shufu is thought to lack the financial capacity to participate in a vital issue.

Salvation is the Chinese government through regional investment funds bring new equity.
Volvo's strained finances are confirmed by several subcontractors under the trade organization FKG which says that the company constantly have to wait for payments.
The fear is that we should not have something closer to Saab in a Volvocars.
By Scancomark.se Team

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