Exclusive: In-fighting raises concern over Volvo Car recovery - sources

Tue Oct 2, 2012 1:31am EDT
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By Norihiko Shirouzu

BEIJING (Reuters) - A boardroom-level conflict at Sweden-based luxury auto firm Volvo Car Corp is infecting some day-to-day decisions and threatens to hamper its Chinese owner's efforts to turn the business around, sources close to the company said.

Chief Executive Stefan Jacoby and Vice Chairman Hans-Olov Olsson are locked in an often personal in-fight that began to develop after China's Zhejiang Geely Holding Group Co bought the Swedish brand from Ford Motor Co two years ago, the sources said.

Jacoby, on medical leave after suffering a minor stroke last month, and Olsson, who effectively heads the Volvo board, have clashed over a key executive appointment and have also made conflicting statements on group strategy, added the sources, who didn't want to be named because of the sensitivity of the matter.

"It's just been a mess," an ex-Volvo executive said. "Jacoby has not been able to run Volvo the way he wants to."

Jacoby made no mention of any job pressures when announcing his stroke, saying he was keen to return to work, but Volvo insiders suspect friction with Olsson may have added to an unhealthy level of stress for the CEO.

The two men are meant to challenge each other under an arrangement put in place by Geely to help create internal checks and balances, but sources said tensions between the pair have grown to become a management problem that Volvo can ill afford. It has also thrown another spotlight on China's mixed success so far in taking over and managing major overseas consumer brands.

Geely's billionaire chairman, Li Shufu, who is also Volvo chairman, brought back Olsson, a former Volvo CEO and four-decade veteran of the firm, to help keep Jacoby, a German, on his toes. Olsson, 70, chairs Volvo's board on behalf of Li, who doesn't speak English, Volvo's main working language.

But some Volvo insiders worry about the impact of the men's soured relationship on Volvo's business turnaround plan, which aims to revive flagging sales in Europe and restore Volvo's stalled momentum as a luxury brand, the sources said.   Continued...

Zhejiang Geely Holding Group Chairman Li Shufu (L) and Volvo CEO Stefan Jacoby look at each other during the Volvo Cars China Business Strategy Launch in Beijing in this February 25, 2011 file photograph.REUTERS/Christina Hu/Files