Further Structural Changes Necessary at Volvo Car Corporation

GOTHENBURG – October 8, 2008: To meet the rapidly deteriorating market situation in the global car industry, the management team at Volvo Car Corporation has decided to initiate further structural changes in all parts of the business. This morning, the Swedish Public Employment Service has been informed of additional redundancies affecting around 2,000 blue collar employees and 700 white collar employees in Sweden. Outside Sweden, an additional 600 employees will be made redundant and some 700 contracts with consultants will be terminated.

On June 25th an announcement was made on the reduction of 2,000 people including 500 consultants. The total redundancy actions now planned to be initiated account for 6,000 people worldwide, of which 1,200 are consultants.

"These are difficult times for the car industry in general, including Volvo. These actions are necessary to create a new and sustainable Volvo Car Corporation - a company with more focused operations and structure," says President and CEO of Volvo Car Corporation, Stephen Odell.

"The unstable economic environment has resulted in a very unpredictable situation, and the downturn in the global car industry is more drastic than expected," Odell continues.

The notice handed in today to the Swedish Authorities includes 2,230 employees at Volvo Car Corporation in Gothenburg, 410 employees at Volvo Cars Body Components in Olofström and 60 employees at the Volvo Cars Engine Plant in Skövde/Floby. The company is also planning a reduction of 600 people outside Sweden.

In an earlier press release (September 12th), Volvo estimated that approximately 900 blue collar employees would be affected. Given the turbulence in the world economy over the last few weeks, however, it is clear that further costs saving actions are necessary for the company to manage the difficult market situation.

The process to negotiate a new organization commenced on June 25th. Today's announcement will delay these negotiations with the unions as it needs to be integrated with the previous plan. The new organization is expected to be in place by the end of the year.