File photo: Bob Strong/Reuters.
INTERNATIONAL - Volvo Cars is stepping up cost-cutting in a bid to reverse a drop in profit as the Chinese-owned company succumbs to pricing pressure from competitors and trade friction that has unsettled global car manufacturers. 

The Swedish carmaker, owned by China’s Zhejiang Geely Holding Group, aims to reduce costs by 2 billion kronor (R2.99billion) after first-half operating profit dropped 30 percent, according to a statement. 

“There are headwinds in most car markets, and combined with tariff costs, that is obvious in our margins,” chief executive Hakan Samuelsson said. 

“We saw this coming a number of months ago.” Volvo Cars has been one of the bright spots of the car industry since it was bought by Geely and revamped its line-up. While it's selling more cars than ever, the latest results show the group isn't immune to emerging challenges. Volvo has already unveiled a plan to withhold staff bonuses after profitability declined for the first time since 2012, and margins have continued to deteriorate. 

The results follow a profit warning last week from German rival Daimler as well as parent company Geely. Samuelsson said he expects the latest round of savings, which includes 750 job cuts, to contribute to higher profit in the second half of the year. Volvo also expects to set new sales records after starting production of the XC40 model in China.