It's a lot of work. Routine work will be replaced by AI. That means writing quotes, replying to customers, and so on. I think the second thing is to think about 'stop doing.' Do we have to do all the things we do today?
It's been exactly a year since Håkan Samuelsson came back as CEO of Volvo Cars, after outsider Jim Rowan was fired. Håkan Samuelsson is clear about what he tackled first.
The first thing to remember is that I found that people after COVID developed the bad habit of working from home. That was the first thing I said. No, it's back to the office now. It's simply because I'm convinced spontaneous communication and unplanned questions are what give us creativity and progress. You can't sit at home and just do what you're told to do.
How did you notice the difference?
The restaurant manager praised me. He thanked me—the restaurant's occupancy had skyrocketed. They said profitability was much better now. Nice to hear that.
But is there anything concrete—better teamwork, more ideas, etc.?
It's very hard to measure, because you never have a parallel track. I feel there's great energy here, and a strong sense of commitment. And that's exactly the atmosphere created when people meet. It's hard to create over a Teams meeting.
Honestly, is Volvo Cars in a stronger or weaker position today than when you last stepped down as CEO?
Yes, it's hard to compare. But I still think that over the years I've been here, we've improved. And that's probably not because of me, but because the organization works better. But external factors mean we're in a tougher situation. You have the China market—it's headwinds for all Western carmakers. Domestic brands are catching up with us, and it's harder. Despite the headwinds, we hold our volumes better than the others. In the US it's also gotten tougher, with tariffs, duties, and less EV support. Two key markets—China and the US—are tougher since I returned this year.
We'll come back to the outside world, but first, let's focus a bit internally. What's the biggest concrete improvement you've made since you came back?
Well, first, we're back at the office. That's number one. Everyone's on the bus. Now we're going. Number two is that we have a strong leadership team—we've made changes in management. Number three is that we've cut costs hard, which was necessary. We've reduced indirect costs by about 5 billion this year. 3,000 people have left the company. We've tailored the organization. We've also set up a new organization in China—to meet what's happening there, we run it more like a separate company. We've done regionalization. We run the China operation through a board. We use much more Geely technology to quickly launch so-called smart cars that really take off in China, with both autopilot features and advanced infotainment. We can roll that out much faster with Geely tech in our cars. I'm very pleased with what I've done over this past year.
What are the big problems, if we're only talking internal ones? What remains? What do you have to do at work over the next twelve months?
Looking ahead, I think our task is to come back with a clear plan—a very clear program that makes Volvo a much stronger company through electrification and the technology shift. We now need to lock in a product plan for around 2030—our all-electric goal. Our goal is a fully electric lineup covering our market segment. But what's new is that we'll also have, as a backup, some plug-in hybrids for customers who still aren't ready to be able to charge.
You're investing big in electrification while cash flow is under pressure. What will you do to improve cash flow?
One thing is we have to think differently. Traditionally, you might start with a long list—everything here is what we'd like to do. Then the nasty controllers come in and say you have to cut this. It feels like a too slow and destructive process. So we think more like: This is the frame we can afford. We talk about that a lot: 'affordable frames.' We've also adjusted our investments to bring them down to the right level, which means we're now seeing a clear improvement in cash flow. The trend is moving in a positive direction. That, I think, is the financial target I'd really like to see us deliver.
It's heading the right way, but what else can you do to improve it?
Of course, it's about volume, and cutting material costs to raise margins. Our new car is important, because the new platform means much lower costs. But then it's working on the brand and customer experience to raise prices. So volume and better margins are the basis for cash flow; we must cut overhead. SEK 5 billion isn't where we can stop. Yearly productivity gains in offices, just like we do in the workshops.
What could that be? How can you optimize it and make it better?
A lot of routine work will be replaced by AI—writing quotes, replying to customers, and so on. Getting information far more easily instead of going out to look for it. So AI is one way. But the other, I think, is to consider 'stop doing.' Do we have to do everything we do today? Because if we keep doing everything we've done before, we add new ideas, then it's on top of everything else, and the organization grows. Now we also have to think in terms of 'affordable frames.' This is the headcount we can afford, so we have to prioritize. Then we have to stop doing other things. When people quit, retire, and so on, we have to move away from the idea that we should replace every one of them. Instead, it's a prompt to reflect: Is there something here we can do differently? Can we reorganize and merge functions to take advantage of attrition for productivity improvements? I think that's really important as we look ahead. We can't keep working the way we used to—every five years doing a big package, laying off 3,000–4,000 people. I don't think that's good for knowledge-building or motivation.
Instead, natural attrition, retirements, and the like?
Yes, to use that to get continuous productivity improvements of, say, 3% per year. I think something like that is absolutely reasonable.
Well, because if I take attrition, maybe one in five, I think some replacement will always be added. But at least half of natural attrition should be productivity improvement. Then I don't know exactly—attrition varies year to year—but say at least half should become productivity growth.
Looking at AI specifically, take programmers who say today they can get incredibly more done in far less time. Isn't 3% a bit too low an ambition level?
