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Business

Sweden's Volvo to halt production as demand dips

Carmaker Volvo has announced it will have to halt production for a week. The China-owned company has experienced infighting over strategic issues at management level and has suffered because of waning demand in Europe.

Sweden-based automaker Volvo announced on Monday that it would have to temporarily stop production at its main facility in Torslanda in the west of the Scandinavian country.

The company said the plant would see a week-long stoppage from October 29 to November 2. The move came on the back of an October 1 decision to reduce the number of vehicles produced daily at the Torslanda plant from 57 cars to 50 cars per hour.

Management said the measures were a direct consequence of drastically dropping demand across Europe as much of the continent was still in the grips of a protracted debt crisis.

No recovery in sight

"Europe is the main market for Volvo, and the continued recession is naturally affecting the demand for our cars," Finance Chief and Acting Chief Executive Jan Gurander said in a statement.

In September, the Swedish carmaker reported a $37.6 million (29 million euro) loss for the first six months of the current year.

In 2010, Volvo was taken over from US giant Ford by China's Zhejiang Geely Holding Group. The Asian owners had hoped to turn the business around very quickly. But a full recovery of the company was also reported to have been hampered by a boardroom-level conflict, resulting in often conflicting statements on the firm's strategy.

hg/kms (dpa, Reuters, AFP)