Volvo Cars Corporation announced on Wednesday that its operating profit fell 84 percent in the first half of 2012 compared to the same period last year.
The Swedish carmaker owned by China’s Zhejiang Geely said the diminishing profit was caused by tough competition and the global economic downturn.
Volvo’s H1 operating profit was 239 million Swedish crowns ($35.63 million) in the first six months of the year, compared with 1.53 billion Swedish crowns in H1 2011. Unit sales also fell 4.1 percent to 221,309 cars.
“The economic uncertainties in most of our markets will remain for the rest of the year and competition is stiff,” CEO Stefan Jacoby said in a statement quoted by Reuters. According to one of Volvo’s unions, the carmaker planned to cut production by about 10 percent and reduce the number of its employees by 200 to 300 people as a reaction to the slowdown in sales.
Volvo announced in the past that it aimed to double sales to 800,000 units by 2020 from just 400,000 cars. The plan includes 200,000 sales in China, a major leap up from the 47,000 units it sold in 2011. Geely bought Volvo from Ford Motor Company in 2010 for $1.8 billion, representing China’s biggest overseas auto venture.