In a press statement Volvo Buses announces it will close in 2024 its bodybuilding factory in Wroclaw, Poland. The reason for this drastic measure is that Volvo is changing its business model in Europe to a model as it has in several other parts of the world. “Our business in Europe has been loss-making for years. With this business model, that we already today apply successfully in many markets, we will improve profitability and secure our long-term competitiveness,” says Anna Westerberg, President of Volvo Buses.
This means that Volvo Buses will focus its production on chassis and together with external bodybuilders offer customers in Europe a complete range of city and intercity buses as well as coaches for the premium segment. The press release states that “this new model will give Volvo Buses a leaner structure, improved flexibility, and the ability to better meet market requirements and customer demands”. Volvo Buses has signed a Letter of Intent regarding the divestment of its premises in Wroclaw to investor Vargas Holding. A restructuring provision of SEK 1.3 billion will negatively impact operating income in the first quarter of 2023. The bodybuilding manufacturing in Wroclaw is planned to continue until the first quarter of 2024. Volvo Buses emphasize that orders placed for complete buses and coaches in Europe will be delivered from the Wroclaw plant according to plan. Volvo Buses will continue to give full service and support to the existing fleet as well as to the new offering. Following the Letter of Intent (LoI) Volvo Buses’ premises in Wroclaw will be divested to Vargas Holding which as sustainable investor is already active with Northvolt, H2 Green Steel and Polarium. The company “will re-purpose and gradually grow the production facility”. The Lol includes
Vargas Holding’s aim to offer employment to parts of the Volvo employees, some as early as the third quarter of 2023. The decision to end the production of complete buses and coaches will impact approximately 1,600 positions at Volvo Buses, whereof around 1,500 are based in Wroclaw. Information and dialogue with respective unions have been initiated.
Volvo Buses’ factories in Sweden and Brazil producing chassis and the manufacturing of complete buses and coaches in Mexico and North America are not affected by the decision and will continue with production as normal. Implementation of the new business model is expected to negatively impact revenues in Europe temporarily during the transition period in 2024 and 2025. The expected negative cash flow effect is estimated to approximately SEK 1.0 billion, of which the majority will impact 2024. Volvo Group will continue to have a strong foothold in Poland also after the factory closure with more than 2,100 employees working at Volvo Trucks, Volvo Construction Equipment and Group support functions such as digital and IT, real estate, people services and accounting services.