Volvo Car Corporation has announced that its Chief Executive Officer and President Stefan Jacoby, who has recently been on ‘short-term’ sick leave from the company after suffering a mild stroke, is to be replaced immediately by Håkan Samuelsson, the former Chairman of the Executive Board at MAN SE and currently an independent member of the Volvo Car Board of Directors.
Jacoby is leaving Volvo Car Group and stepping down as a Board member following what is described as “an amicable agreement with the Board of Directors.”
Li Shufu, majority shareholder and Chairman of the Board has commented: “I see major opportunities for Volvo Cars to improve profitability, and accelerate our growth plan in China specifically. I am convinced that Håkan Samuelsson’s thorough experience and leadership will help us increase performance.
“We have a strong strategy and transformation plan in place which we will now execute. I would like to thank Stefan Jacoby for his valuable and strong contribution developing the strategy and taking the company through the first two years following the acquisition of the Volvo Car Group by Zhejiang Geely Holding.”
Samuelsson was head of MAN between early 2005 and November 2009, when he unexpectedly resigned. He was the architect of an unsuccessful effort in 2006 to leapfrog rivals Daimler and Volvo AB, by purchasing rival Scania AB, his former employer, to create Europe’s largest OEM. Volkswagen has subsequently acquired ownership of both Scania and MAN.
Samuelsson has commented on his now position: “My time on the Board has provided me with insight in the Volvo brand and the company. My focus will be on execution and performance, to secure profitability and meet our sales objectives. No other business is as demanding, complex and full of challenges as the automotive industry. I look forward to leading Volvo Car Group in the most exciting period of its history.”
Although denied by Volvo, rumours have surfaced in recent weeks that there was a rift between Jacoby and company Vice Chairman Hans-Olov Olsson, which had been disrupting the day-to-day running of the company and hampering its strategic development. Jan Gurander, Chief Financial Officer at Volvo Car has been serving as acting Chief Executive Officer during Stefan Jacoby’s absence.
A Reuters report claimed that Jacoby and Olsson were locked in an often personal in-fight that began to develop after Zhejiang Geely Holding Group bought the company from Ford two years ago. The two are said to have clashed over a key executive appointment and have also made conflicting statements on group strategy. An unnamed ex-Volvo executive was quoted by Reuters as saying: “It’s just been a mess; Jacoby has not been able to run Volvo the way he wants to.”
According to Reuters, the two executives were meant to challenge each other under an arrangement put in place by Geely to help create internal checks and balances, but unnamed sources said tensions between the pair had grown to become a management problem.
A Volvo spokesperson was reported as saying: “There is no conflict between Stefan Jacoby and Hans-Olov Olsson. In a company undergoing such a rapid transformation it is natural – and positive – that the board has constructive discussions. The opposite would be devastating.”
Disagreement over the roles of the board and executive management were reported to be an issue, with Jacoby seeing the executive management team as the core decision-making body, with the board providing oversight. In contrast, Olsson was said to take a more interventionist board approach to executive decisions.
Despite taking what Jacoby described at the time as “a proactive approach to protect margins,” the Volvo Car Group reported a significant crash in earnings and profitability in the six months ended 30 June 2012.
Although revenue in the January-June 2012 period rose by 3.9% year-on-year to SEK 65,325m (US$9.76bn) from SEK 62,863m in H1 2011, retail vehicle sales declined 4.1% to 221,309 (230,746) and EBIT collapsed to SEK 239m (0.4% margin) from SEK 1,529m (2.4%). The net profit of SEK 1,213m reported in H1 2011 was also replaced by a loss of SEK 254m in the latest six-month period.
Volvo recently confirmed it has decided to temporarily halt production at its Torslanda plant in Gothenburg, Sweden during week 44 – from 29 October to 2 November. The temporary production stop is in addition to an earlier decision to reduce the production pace in the Torslanda plant from 57 cars to 50 cars per hour. That change came into effect on 1 October. The company reassured “there are no plans for changes to the permanent work force at the Torslanda plant.” Gurander commented: “Europe is the main market for Volvo Car Corporation and the continued recession is naturally affecting the demand for our cars. Against this background, it is essential for us to continue to use the built-in flexibility we have within our manufacturing system.”
