Volvo Buses changes business model in Europe and has decided to close its bodybuilding factory in Wroclaw in 2024

Volvo Buses is restructuring its business model in Europe, shifting focus to chassis production and external partnerships for building complete buses and coaches.

Rhea-AI Summary

Volvo Buses is restructuring its business model in Europe, shifting focus to chassis production and external partnerships for building complete buses and coaches. The company will close its bodybuilding factory in Wroclaw, Poland, by Q1 2024, impacting around 1,600 jobs. A restructuring provision of SEK 1.3 billion will negatively affect operating income in Q1 2023. The move aims to enhance profitability and competitiveness in the European market, which has been loss-making for years. However, the transition is expected to temporarily reduce revenues in Europe during 2024 and 2025.

Positive

• Transition to a more profitable business model focusing on chassis production.
• Divestment enables potential job opportunities for affected employees with Vargas Holding.

Negative

• Closure of Wroclaw factory affects approximately 1,600 positions.
• Restructuring provision of SEK 1.3 billion negatively impacts Q1 2023 income.
• Temporary revenue decline expected during the transition period in 2024 and 2025.

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GOTHENBURG, Sweden, March 16, 2023 /PRNewswire/ -- Volvo Buses is changing its business model in Europe and will apply the same successful model as it has on several other markets. This means that Volvo Buses will focus its production on chassis and together with external bodybuilders offer customers in Europe a complete range of city and intercity buses as well as coaches for the premium segment. Consequently, Volvo Buses has decided to close its bodybuilding factory in Wroclaw, Poland, during the first quarter of 2024. Volvo Buses has signed a Letter of Intent regarding the divestment of its premises to Vargas Holding. A restructuring provision of SEK 1.3 billion will negatively impact operating income in the first quarter of 2023.

"Our business in Europe has been loss-making for years. With this business model, that we already today apply successfully in many markets, we will improve profitability and secure our long-term competitiveness," says Anna Westerberg, President of Volvo Buses.

Moving forward, Volvo Buses will continue to have the customer interface, offer customers in Europe a complete range of buses and coaches in partnership with selected external bodybuilders, while securing a strong uptime service and a high standard of safety and quality. This will give Volvo Buses a leaner structure, improved flexibility, and the ability to better meet market requirements and customer demands.

The bodybuilding manufacturing in Wroclaw is planned to continue until the first quarter of 2024. Orders placed for complete buses and coaches in Europe will be delivered from the Wroclaw plant according to plan. Volvo Buses will continue to give full service and support to the existing fleet as well as to the new offering.

New opportunities for Volvo Buses employees
After discussions between Volvo Buses and Vargas Holding, a Letter of Intent (LoI) has been signed according to which Volvo Buses' premises in Wroclaw will be divested to Vargas Holding. Vargas Holding will re-purpose and gradually grow the production facility. The production will start in 2024 and expand in the years to follow. The Lol includes Vargas Holding's aim to offer employment to parts of the Volvo employees, some as early as the third quarter of 2023.

"Although Vargas Holding will operate in a different industry to ours, a key factor for them is the possibility to employ the experienced staff working in our organization in Wroclaw needed for their establishment and future expansion," says Anna Westerberg.

The decision to end the production of complete buses and coaches will impact approximately 1,600 positions at Volvo Buses, whereof around 1,500 are based in Wroclaw. Information and dialogue with respective unions have been initiated.

"Volvo Buses will do the utmost to support our loyal employees, many of whom have been employed for numerous years. We will work together with Vargas Holding, local authorities and other parties to support people in finding new employment opportunities," says Anna Westerberg.

Volvo Group will continue to have a strong foothold in Poland also after the factory closure with more than 2,100 employees working at Volvo Trucks, Volvo Construction Equipment and Group support functions such as digital and IT, real estate, people services and accounting services.

Volvo Buses' factories in Sweden and Brazil producing chassis and the manufacturing of complete buses and coaches in Mexico and North America are not affected by the decision and will continue with production as normal.

Volvo Buses' factories in Sweden and Brazil producing chassis and the manufacturing of complete buses and coaches in Mexico and North America are not affected by the decision and will continue with production as normal.

Implementation of the new business model is expected to negatively impact revenues in Europe temporarily during the transition period in 2024 and 2025. A restructuring provision of approximately SEK 1.3 billion will negatively impact operating income in the first quarter of 2023. The expected negative cash flow effect is estimated to approximately SEK 1.0 billion, of which the majority will impact 2024. Once completed, the move to the new business model is expected to make the European bus operation profitable. 

For more information, contact: Joakim Kenndal, Head of Media Relations, Volvo Buses, phone: +46 739 02 51 50 or email: joakim.kenndal@volvo.com 

Volvo Buses is one of the world's leading providers of sustainable people transport solutions. The offer includes premium city and intercity buses, coaches, and bus chassis as well as services for increased productivity, uptime and safety. Volvo Buses has sales in 85 countries and a global service network of more than 1,500 dealerships and workshops. Volvo Buses is part of Volvo Group, one of the world's leading manufacturers of trucks, buses and construction equipment as well as drive systems for marine and industrial applications. Volvo Group also provides complete financing solutions. For more information visit http://www.volvobuses.com

The following files are available for download:

https://mb.cision.com/Main/39/3735134/1920968.pdf	230316-buses-changes-business-model-in-europe-en
https://news.cision.com/ab-volvo/i/1860x1050-news-common-volvo-sign,c3156598	1860x1050-news-common-volvo-sign

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SOURCE AB Volvo

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What is Volvo Buses' new business model in Europe?

Volvo Buses is shifting to a model focusing on chassis production and partnering with external bodybuilders for complete buses and coaches.

When will Volvo Buses close its bodybuilding factory in Wroclaw?

The bodybuilding factory in Wroclaw will close during the first quarter of 2024.

How many jobs will be affected by the closure of the Wroclaw factory?

Approximately 1,600 positions at Volvo Buses will be impacted by the factory closure.

What is the financial impact of the restructuring for Volvo Buses?

A restructuring provision of SEK 1.3 billion will negatively affect operating income in the first quarter of 2023.

What are the future plans for Volvo Buses in Europe?

Volvo Buses aims to improve profitability and competitiveness in Europe through the new business model.