Update: Volvo denies plans to cut 30% of U.S. dealerships over 2009

Posted Mon Jul 14 2008 3:42 PM by Nelson Ireson

Update: Volvo today denied reports it was looking to cut 30% of its dealerships in the U.S. as weak sales push volumes further downward. Instead, the company says it is planning to 'persuade' some struggling dealers to voluntarily give up their franchises.

Clearly, the difference is mostly one of semantics, the original report being based on the words of one of Volvo's German spokespersons and reported by Automotive News, which is also reporting the denial. The misunderstanding lies in the nature of the dealership reductions, with the company denying it would forcibly cut its ranks. Whether the 30% target remains in play was not revealed.

Original: The slow car market in the U.S. isn't just hurting the manufacturers and the union workers that build the cars. Slow sales mean smaller profits for dealers, too, and they often operate with very little margin to begin with. In an effort to strengthen its dealership network, Volvo will cut 30% of its U.S. outlet. The move is hoped to help profitability by giving each of the remaining dealers a larger slice of total sales.

Doomsayers will no doubt see another nail in the brand's coffin, with the end result being the consistently-denied sale from Ford's holdings. Volvo's officials certainly don't see it that way, however, blaming the weak dollar for lost profits. The driving force, however, is the massive downturn in Volvo's U.S. sales, reports Automotive News.

Volvo's U.S. sales for June were just 7,001 units, down almost 27% compared to the previous year. Sales are down 14% for the year so far. That's a bad sign for sales in the market where Volvo does 23% of its business by volume.

Things in Europe are going well, however, with no plans for cutbacks or restructuring.

Reader Comments

Fri Jul 11 2008 6:59 PM
HECTOR says

I am one of the doomsayers saying that Volvo is not quite a la par with the German big 3 in anything but in price. Good cars though they undoubtedly are they're just too expensive.
Sat Jul 12 2008 4:41 AM
bambam says

What you mean no cutbacks.
You mean, there is no rumors of a cutback.
off course some or one or two will be drop.
Tue Jul 15 2008 6:30 AM
94 Taurus owner says

FORD IS"NOT" SELLING VOLVO PEOPLE .ENOUGH WITH THE RUMORS ALREADY!!!!!!!!

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