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Clash of Boardroom Titans threatens Volvo Car Corp. Resurgence

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Stefan Jacoby, CEO at Volvo Car Corp.

Stefan Jacoby, CEO at Volvo Car Corp.

China-owned Swedish luxury auto giant Volvo Car Corp. is inflicted with the pestilence of inside war. Close sources reportedly reveal that Volvo’s Vice Chairman Hans-Olov Olsson and Chief Executive Stefan Jacoby are involved in a combat which time and again becomes personal. The boardroom battle slowly gathered impetus after China-based Zhejiang Geely Holding Group acquired the Swedish corporation from Ford Motor Co. nearly a couple of years back. Reliable sources confirm that this Volvo CEO-vice-chairman in-fight has effectively hindered the Chinese group’s attempts to revive the business.

The Inside Story

As the Volvo in-fight hampers business, sources disclose that Jacoby, on sick leave following a stroke the previous month and Olsson, who happens to head the board at Volvo Car Corp., have almost severed ties over a crucial management appointment. Reportedly, the duo has made contradictory declaration regarding the group policy. This Volvo CEO-vice-chairman in-fight has created an exceedingly sensitive situation within the group.

While Jacoby made a public statement regarding his stroke, he made no mention of work pressure and expressed eagerness to come back to work. However, inside opinions hold Volvo CEO-vice-chairman in-fight responsible for the health condition of Jacoby. As the increasing pressure of the Volvo in-fight hampers business, it is now grown into a serious management snag that Volvo Car Corp. can no longer deal with. Interestingly, the boardroom battles have raised eyebrows over Chinese triumph in the field of takeover of foreign consumer entities.

Li Shufu, chairman of Geely as well as Volvo Car Corp., re-appointed Olsson, an ex-CEO of Volvo with 40 years of experience in the firm to monitor German-based Jacoby. 70 years old Olsson, represents Li, who is unable to communicate in English, at the board. Insiders fear that the Volvo CEO-vice-chairman in-fight will impede Volvo’s revival plan which intends to control the declining sales in Europe and reinstate Volvo's brand image.

The Plot

The argument came to its height last year with Olsson trying to influence Jacoby to promote Thomas Andersson, son-in-law of Olsson, from vice president to global head of customer service, marketing and sales. Volvo’s Chinese owner also wanted the same. On the contrary, Jacoby appointed a North American executive. In spite of repeated reports of the argument, Volvo Car Corp. maintains that there is no conflict.

Work Stress

54 year old Jacoby publicly declared on the 23rd of September that he would discontinue work for a month to recuperate through his stroke. As reported by an executive, Jacoby wants Chairman Li to administer the board and not Olsson, an issue cropping up from a conflict over tasks of the board and executives.

Spelling Crisis for Volvo?

Following takeover by Geely, Volvo Car Corp. is aiming to increase its yearly global sales twofold and strongly establish its footprints in luxury auto sales. However, last month Volvo registered a net loss. As stated by Jacoby, Volvo is doubtful about reaching its target sale of 200,000 cars per year in China around the year 2015.

Jacoby and Olsson also disagreed on whether Volvo would be headquartered in Sweden under Geely. As the Volvo in-fight hampers business, the company would face stiff competition from brands like Volkswagen's Audi, Jaguar and BMW.

One Comment

  • Both Olsson and Jacoby have solid, performance-proven credentials. They also have very strong personalities. Both have much at stake in collaborating on the execution of Volvo’s business plan, as does Thomas Andersson, an affable and competent marketing executive. However, Volvo does not need this background noise at a critical time as it reinvents itself after suffering a deliberate financial blood-letting in the last five years of Ford’s ownership. Pragmatically, a company’s CEO must be allowed to make his own executive team personnel decisions without Board interference. if this report is accurate, it is potentially damaging to the well-earned reputation of Hans-Olov Olsson and likely to negatively impact Thomas Andersson’s career path as well. Both outcomes would be unneccessary and unfortunate. Once Mr. Jacoby returns from medical leave, it is time for him and Mr. Olsson to lock themselves up in a room off campus and stay there until they work this out for the good of the corporation.

    Full disclosure: I own Volvo dealerships in the United States and know the executives mentioned in this article.

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