Volvo Could Be Forced To Slash Facelifts And R&D Projects To Save Money, EV and Autonomus Programs Safe



The ongoing Coronavirus pandemic has put a colossal strain on the financial resources of nearly all the world’s automakers. They have been forced to close dozens of plants and even other aspects of their operations to try and slow down the spread of COVID-19. Further squeezing things are the closures of dealerships that have turned off a very key flow of money for these corporations. As a result, a few companies are getting creative with where they are cutting costs, and it appears that Volvo could possibly go down this route if things don’t improve soon.

A new report that was published in the publication Automotive News Europe suggests that Volvo will look at several aspects of its business in an attempt to help cut costs, with two of them (R&D and mid-cycle vehicle refreshes) potentially being placed directly under the microscope. Volvo CEO Hakan Samuelsson told the publication that the company has thousands of R&D projects in various stages of development, and that the company will question “whether we need to do them all.” So what does that mean for the future going forward?

A big thing is that Volvo will aggressively safeguard its EV, future technology, and autonomous vehicle projects, with Samuelsson revealing that “all three are an absolute priority.” He elaborated further stating “any changes there would jeopardize our strategy.”  On that note, look for future projects in the company’s traditional vehicle lineup to be potentially affected by these moves. That could include upcoming variants of the S60 sedan, as well as the XC40 CUV. Refreshes could also be impacted by the cost cutting moves, with Volvo perhaps not following the traditional four year blueprint that has become commonplace in the industry. The current design language for the company is arguably the most elegant, and sleekest interpretation of Swedish simplicity yet. However, it will be interesting to see how the styling holds up against rivals if Volvo is forced to go longer without major mid-cycle updates, especially against German rivals who are traditionally very agile and calculated about mid-cycle updates for their models.

 

The fallout from the virus is still rapidly developing, but it appears that the residual impact could potentially last up to several months, with Automotive News Europe citing IHS Markit’s research that revealed that automotive research budgets are expected to be slashed by 17 percent this year, with a further 12 percent decline next year. Those are very sobering figures and every dollar lost means that a new model will not get some of the precise attention to detail that it deserves during this key step in the birthing process of an automobile. Development budgets will also be cut, but it is currently unknown just how much of an impact that particular department will face. Either way, look for the impacts to be noticeable especially to consumers.