Unlock the Editor’s Digest at no cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
Volvo Automobiles will ebook a one-off cost of SKr11.4bn ($1.2bn) because the Swedish group forecast smaller income from two essential car fashions as a consequence of US President Donald Trump’s automotive tariffs and launch delays.
The Geely-owned group is closely uncovered to increased import tariffs within the US and Europe and has already introduced a minimize of three,000 jobs globally to avoid wasting prices.
Volvo Automobiles on Monday blamed the non-cash impairment cost on launch delays and extra improvement prices for its flagship EX90 sport utility car, which led to decrease margins.
The corporate added it was unable to promote its new ES90 — which is inbuilt China — profitably within the US as a result of 25 per cent tariffs Trump has imposed on imports of foreign-made automobiles.
The group has mentioned it desires to extend manufacturing in South Carolina to deal with the upper US tariffs.
German carmakers and Volvo Automobiles had earlier expressed hope that the US would alter its coverage to permit them to offset import tariffs if additionally they exported automobiles from America. However there was no such concession from the Trump administration, which over the weekend threatened to impose tariffs of 30 per cent on the EU from August 1.
“Given market developments such as import tariffs in the US, development and launch delays for the EX90 and strategic investment prioritisations, we have reassessed volume assumptions for these two cars,” mentioned Fredrik Hansson, chief monetary officer at Volvo Automobiles. This has led to “lower than planned lifecycle profitability”, he added.
To deal with the EU’s increased tariffs on imports of electrical automobiles made in China, Volvo Automobiles will produce its EX30 EV mannequin in its Ghent plant in Belgium, in addition to in China from this 12 months.
Past the tariffs, the carmaker was additionally pressured to quickly pause manufacturing at its Charleston, South Carolina, plant in Might as a consequence of a provider problem, whereas the corporate has suffered from a slower than anticipated manufacturing increase for the EX90 as a consequence of software program points.
Bernstein analyst Stephen Reitman mentioned the group’s second-quarter outcomes, which will likely be launched on Thursday, would in all probability be the weakest for the corporate for 2025, with gross margins more likely to fall to 16 per cent from 18 per cent within the earlier quarter.
“Volvo will feel the full effect of EU-China and EU-US tariffs before mitigations start to kick in from third quarter,” he added.
Shares in Volvo Automobiles fell 4.4 per cent on Monday following Trump’s tariff menace on the EU, bringing its year-to-date decline to 25 per cent.
