Steven Armstrong, chief operating officer of Volvo, joins Ford

Article by Christian A., on October 6, 2010

As part of management reorganization under new Volvo Cars Chief Executive Officer Stefan Jacoby, Steven Armstrong will vacate his position as chief operating officer of the company and will return to Ford of Europe.

Freeman Shen has also been named as the head of the Swedish carmaker’s operations in China. Shen had been the adviser to Li Shufu, chairman of Zhejiang Geely Holding Group Co., which purchased Volvo from Ford.

In the statement, Jacoby said that Volvo Cars is going through a “very important and turbulent period.” He said that the company management has to be broadened in order to “quicken the decision process.”

Jacoby has set a target to double Volvo's global sales to 800,000 cars in 10 years. At the Paris Motor Show, Jacoby said that China (where Volvo plans to build local production plants) has the biggest growth opportunity.

However, he said that Volvo needs a long-term strategy for the US market. Last year, Volvo only sold 334,808 cars around the world. This is a drop of 11 percent from 2008 as well as a decrease of 27 percent from a peak of about 460,000 units in 2007.

Under this management reshuffle, the position of chief operating officer has been eliminated and the heads of product development, production, purchasing and quality will now report directly to Jacoby.

The management reshuffle was heavily expected, as several executives at Volvo were from Ford. In late 1990s Ford saw Volvo as a profitable prestige mid-size European carmaker that will make an advantageous addition to its Premier Automotive Group. The US carmaker completed the buyout of Volvo Cars in January 1999. Thus, Volvo became of part of Ford’s Premier Automotive Group (PAG), along with Jaguar, Aston Martin and Land Rover.

Ford announced in December 2008 that it was mulling selling Volvo as the global economic crisis during had been threatening US carmakers. In March 2010, Geely agreed to purchase the Volvo car business from Ford -- the biggest overseas acquisition by a Chinese automaker. Before selling off Volvo, Ford chief executive Alan Mulally had already divested Aston Martin, Land Rover and Jaguar.

As part of the sales agreement, Ford will still supply Volvo with engines, transmissions and other vehicle components. Ford will also provide engineering and technology support and access to tooling for common components. Volvo’s sales to Zhejiang Geely wrapped up Mulally's strategy of cutting European luxury lines to enable it to focus on Ford's namesake brand. Zhejiang Geely has plans to sell 150,000 Volvo cars in China each year by 2015.

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Topics: volvo, ford

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