Volvo ending bodybuilding, focusing on chassis in Europe
Loss-making European business expected to be turned around with restructuring plan
Volvo Buses is to close its bodybuilding factory in Wroclaw, Poland, during the first quarter of 2024.
The news came as the Swedish manufacturer announced it is changing its business model in Europe, focusing on chassis production. It plans to work with external bodybuilders to offer a range of city and intercity buses and coaches in the continent.
Anna Westerberg, President of Volvo Buses, said: “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.”
The decision will impact approximately 1,600 positions at Volvo Buses, whereof around 1,500 are based in Wroclaw.
Volvo Buses believes the change will give it a leaner structure, improved flexibility and the ability to better meet market requirements and customer demands. Implementation of the new business model is expected to negatively impact revenues in Europe temporarily during the transition period in 2024 and 2025. Once completed, the move to the new business model is expected to make the European bus operation profitable.
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.
Volvo Buses’ premises in Wroclaw will be divested to Vargas Holding, who will re-purpose and gradually grow the production facility. The production will start in 2024 and the plan is for it to 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.
Anna Westerberg said: “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.”
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.