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Dark clouds gather for Volvo in South Africa

Volvo is shedding over 60% of its dealer network in South Africa as it shifts focus to becoming an all-electric brand by 2030.

While the Swedish automaker is a big player in this small segment at the moment, the move could backfire on it.

Combined Motor Holdings (CMH) will operate four of the remaining seven Volvo dealers once the dust has settled.

In CMH’s latest annual report, the company stated that Volvo’s intention to focus on electric and hybrid models has “severely hampered its local attraction.”

It added that the “electric and hybrid vehicle markets remain challenging and, without some form of government subsidy or import duty advantage, prices will remain high. Volvo is a significant player in this very small segment.”

While government hinted at the possibility of such incentives in October last year, it has remained mute on the finer details.

It did introduce a tax incentive for new-energy vehicles (NEVs) earlier this year, though it is aimed at manufacturers, not buyers, and is only slated to come into effect on 1 March 2026.

Phase two of the country’s NEV White Paper will then place priority on motivating private buyers to purchase NEVs.

This, however, is only expected to come to fruition in six to seven years, according to Ebrahim Patel, Minister of Trade, Industry, and Competition.

High prices are continuously being cited as one of the main barriers to entry for consumers looking to get into hybrid or fully electric cards.

As such, unless the timeline for incentives is rapidly advanced, or Volvo finds another way to get its electric cars to appeal to the masses, things are not looking all too rosy for the automaker.

Volvo plots turnaround

Volvo EX30

Volvo’s worries are not confined to the South African market.

In April, Bloomberg reported that Volvo has lost about two-thirds of its value since its public listing on the Nasdaq stock exchange in October 2021, partly due to disappointing sales and model delays.

Volvo’s global retail sales decreased by 6% in the first quarter of 2025 to 172,200 units, in comparison to 182,700 for the same period last year.

Meanwhile, its flagship EX90 SUV was earmarked for a global introduction in late 2023, but only reached the first dealers around a year later due to software gremlins that needed weeding out.

To turn around its fortunes, Volvo re-contracted the services of one Håkan Samuelsson who led the company from 2012 to until leaving of his own accord in 2022.

He was reinstated as CEO in the first quarter of 2025 and tasked with crafting a turnaround strategy for the car manufacturer.

Samuelsson laid bare his plans for reviving Volvo in the company’s Q1 2025 financial results, published in April.

He noted that Volvo must protect its cash flow generation and lower its fixed costs should it hope to weather the storm.

To that end, Volvo has launched an “accelerated cost and cash action plan” totalling R34 billion.

This plan will “protect profitability and structural efficiencies on direct and indirect costs, as well as help to offset external headwinds,” said Samuelsson.

Details of the cost and cash action plan are currently in progress, with the first benefits of the initiative expected to be realised in 2026.

In addition, Samuelsson said that the automaker will need to launch transitional plug-in hybrid (PHEV) product in markets that are not yet ready for electric-car adoption.

“Demand for our plug-ins will remain stronger for longer than we thought three years ago, and we are ready for that,” he said.

Recently updated Volvo XC90 PHEV

Third, he said Volvo needs to adapt to a more regionalised world, which will include a more tailored approach for each region in terms of product, technology, manufacturing, and commercial.

This will first take place in China and the United States (US), two major car markets in which Volvo are currently struggling.

In China, the manufacturer hopes to adapt quicker to the fast-changing auto sector and customer demands through giving a larger operational responsibility to its subsidiary in that market.

It will also launch an extended-range PHEV in the region, which shows strong demand for this type of vehicle.

In the US, Volvo will sharpen its product line-up for growth and look into how it better can use its existing manufacturing footprint to produce more vehicles where it sells them.

“We will empower our regions to better meet the needs of our customers, ensuring we are more resilient and fit for growth,” said the CEO.

Looking ahead, Samuelsson expects that 2025 will be a rollercoaster year for the Swedish marque.

“As we enter into the year, we see that tougher market conditions and lower volumes combined with increased price pressure and tariff effects are impacting profitability,” he said.

Given these external developments and increased uncertainties, Volvo also opted to stop providing financial guidance to investors for 2025 and 2026.

“We made strong progress in recent years in electrification and we were one of the fastest-growing premium car companies in the world,” concluded Samuelsson.

“We need to continue in that direction with the right cars, a competitive cost base, and increased resilience.”

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