Thankfully they have facilities around the world.
Volvo has been forced to make some serious supply-chain changes amidst the ongoing trade-war between China and the United States, with their latest factory in South Carolina the greatest victim. The new Volvo America boss says that with retaliatory tariffs on either side, the company has had to shuffle production around somewhat, and the attitude of the current US administration could mean that the current moves are just the start of it.
Rather than having all S60 production based in Charleston and export it all from there (which is what they planned), the S60 will now have to be produced in other facilities, like ones in China and Europe, in order to satiate demand. Additionally, imports of the XC60 have been halted altogether, with the currently-enforced 27.5% tariff on Chinese-imported cars absorbed by the company (which the company said they can do in the short-term, but for no longer than necessary).
“We’ll go at the change not with a smile, but we know what we need to do. We have a global manufacturing structure that helps us manoeuvre in these tough waters. [For XC60] We are absorbing the tariffs, and that really is what you saw in our financial results. But we can, under no circumstances, absorb tariffs in the long run. It’s huge.” — Anders Gustafsson, Senior Vice President (Americas), Volvo Car
In addition to the S60 & XC60, Gustafsson said to Automotive News that the XC90 is another vehicle that’ll require a bit of attention. Described as a “profit machine” for the company’s US division, its China-import status could seriously affect their margins, if not wipe out profits altogether. In the meantime, the S90 (which is exclusively imported from China) has had its numbers shrunk significantly.
“This is not easy. It’s a big, big, big thing. It’s extremely painful. I don’t want to sit here and smile and say that ‘Everything is great!’ Absolutely not. But that’s life.” — Anders Gustafsson, Senior Vice President (Americas), Volvo Car
Volvo is not the only manufacturer affected by the ongoing trade war. American brand Ford has had to pull plans to market the Focus Active sort-of crossover in the US market, as its China-built status would render it uncompetitive against rivals. With no end in sight (unless the US president has a heart attack), could we see more moves in the industry out of the US?