Volvo has named Martin Lundstedt, the head of rival Volkswagen-owned Scania, as its new chief executive to replace Olof Persson who had led a sweeping efficiency drive.
Volvo, vying for dominance of the truck market with Germany's Daimler and VW, also released better than expected quarterly earnings two days ahead of schedule and said it would seek an external partner for parts of its IT business.
While Mr Persson's nearly four-year restructuring programme has contributed to some of the strongest earnings of his tenure, Mr Lundstedt is considered one of the most respected executives in the trucking industry and shareholders hope he will improve the company's global position.
"The action program that Persson initiated seems to be biting and he should get credibility for that," Christer Gardell, managing partner at Cevian, Volvo's second-biggest owner by votes, said.
"But at the same time we support the board's decision to appoint Martin Lundstedt, who is widely recognised as one of the best leaders in the trucking world. Now he has the assignment to make Volvo the world's best trucks company."
Mr Persson's plan aimed to cut costs and boost profitability to the level of more nimble rivals such as Scania. It has yet to achieve that and pressure from shareholders has been building.
Chairman Carl-Henric Svanberg, who as recently as April 1 had said he was confident in the work Mr Persson was doing, told a news conference Mr Lundstedt was being brought in to lead a new chapter for Volvo.
"We are now entering into a new phase. You can't reach world leadership through just cost savings," Mr Svanberg said.
The choice of a new chief executive with such strong truck-making credentials is likely to lead to expectations for a further streamlining of a group that still generates nearly one third of revenues from other businesses so that he can focus on trucks.
Investors like Gardell have made no secret further spin-offs in the wake of the 2012 sale of Volvo's aero operation would be welcome, though a downturn for construction gear makes a deal for the biggest unit outside trucks unlikely in the short term.
Mr Lundstedt, who will take over in October, is a 25-year veteran at Scania, whose flexible production system modelled on the ground-breaking techniques of Toyota in the 1990s has helped it outpace Volvo in terms of profitability over the past decade.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article