4 Min Read
STOCKHOLM (Reuters) - Car maker Volvo has ditched its chief executive for a former trucks boss who faces the daunting task of turning around flagging sales and accelerating a push into the home market of its Chinese owner.
Former MAN SE (MANG.DE) boss Hakan Samuelsson, a Swede, replaces German Stefan Jacoby, who suffered a mild stroke last month and whom sources say was at loggerheads with the effective head of the board.
Volvo, bought from Ford Motor Co (F.N) by Zhejiang Geely Holding Group GEEL.UL for $1.8 billion in 2010, aims to spend about $11 billion to double total annual sales to 800,000 cars by 2020 and boost sales in China to 200,000, from only 47,000 last year.
The target is an ambitious one. The business made a net loss in the first half of 2012 and has faced tough European markets and a slowing Chinese economy.
"We have to get the China growth plan back on track," Samuelsson told a news conference after his appointment, which was decided at a board meeting on Thursday.
Samuelsson has been on the Volvo board since 2010, having left MAN in 2009 after the company was accused of bribery in connection with deals in Slovenia. German prosecutors last month said that Samuelsson and another executive were being investigated for aiding and abetting bribery. MAN, meanwhile, is seeking millions of euros in damages from Samuelsson because of the scandal.
Volvo is the biggest overseas car venture in China and is an important investment, both for China and Sweden, where Volvo still has a large production plant.
However, Jacoby said in a recent newspaper interview that the company's 2015 goal for China sales would not be met.
Reuters sources have said that Jacoby and deputy chairman Hans-Olov Olsson had clashed over a key appointment and strategy.
Olsson said that Jacoby's illness had nothing to do with the decision to remove the German. Olsson, a Volvo veteran who is Geely Chairman Li Shufu's key representative in Sweden, denied that there was any personal conflict and said that Li supported the decision to remove Jacoby.
"We want to succeed with Volvo," Olsson said at Friday's news conference. "The board's responsibility is to take action. The competition does not do us any favours."
Li said in a statement: "I see big possibilities for Volvo Cars to improve profitability and increase the pace of growth, not least in China."
Volvo aims to build two factories in China and has recently shed part-time jobs in Sweden because of the downturn in demand. It is halting production for a week this month.
Volvo has been in talks with the Chinese Development Bank for a loan to help to finance its plans, which it is otherwise supposed to fund from earnings. Olsson told Reuters that the talks are continuing and he hopes for a decision before the end of the year.
New CEO Samuelsson also made waves in Sweden in 2006, when he led MAN in an acrimonious attempted takeover of rival truck manufacturer Scania SCVb.ST, where he had also served as an executive.
The takeover failed, but Volkswagen, a shareholder in both, later thrashed out a deal to buy most of Scania and aims to forge closer ties between the two truck companies.
Jacoby suffered his stroke in mid-September, limiting mobility in his right arm and leg. He has been on medical leave since then, though Volvo had said he was making progress towards a swift return to work.
Additional reporting by Daniel Dickson; Editing by David Goodman