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Volvo May Have to Cut Back on Facelifts and R&D

As a response to the cost of the coronavirus, Volvo may cut future costs by slowing R&D and mid-cycle refresh spending. The measures would not, according to Volvo CEO Hakan Samuelsson, affect the company’s research into electric vehicles or autonomy.

Samuelsson told Automotive News Europe in an interview that the cost shutting down factories for weeks and lowering global auto sales will cause the company to look at several aspects of its business.

Currently, the least disruptive areas to cut from appear to be mid-cycle refreshes and some R&D projects.

With thousands of research projects currently underway, Samuelsson tells ANE that the company will “question whether we need to do them all.”

Other manufacturers, like GM, have similarly pushed back their mid-cycle facelifts. According to Samuelsson, Volvo needs “reduce cash burn.”

Still, electric vehicle and automation remain “an absolute priority” and “any changes there would jeopardize our strategy,” so don’t expect those projects to all of a sudden be canceled.

The entire automotive market is expected to contract by at least 20%, so Volvo is far from the only manufacturer making difficult decisions like these. Worse still For Volvo, the premium sector is expected to be hit especially bad. That will make taking protective steps especially important For Volvo and its ilk.

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