Volvo Trucks to Close Bus Plant in Sweden

Truckmaker AB Volvo plans to end bus production at its factory in Saeffle, Sweden, next June because of shrinking demand in Europe.

The plant closing will eliminate about 390 jobs. Volvo will consolidate bus output at a facility in Wroclaw, Poland. That factory has been operating at 50% of capacity, according to Warsaw-based newspaper Puls Biznesu.

Hakan Karlsson, acting head of the bus unit, says the move will reduce costs and reverse losses in the segment, where pricing competition has become fierce. Operating margin at Volvo Bus was 4.6% last year compared with 9.1% for trucks and 10.2% for construction equipment.

The company expects to take a 100 million kronor (€12 million) charge in the current quarter for the plant closing.

Karlsson, who also serves as Volvo's business areas unit, became interim bus chief last month when Per Carlsson stepped down after nine months in the job. The company tells Bloomberg News the change was prompted the "differing opinions" of the two executives about how the business should be run. Volvo says Carlsson may leave the company.