Volvo Shuffles Production To Avoid Tariffs

Industry News

How will these moves affect US production?

With the recent tariff threats, foreign automakers without a sizable presence in the United States have been in a bit of a panic. Take Volvo, for example. The Swedish automaker was forced to move production of its XC60 from China back to Europe and is currently seeking an exemption on Chinese built models. General Motors has also asked for tariff exemptions for its Chinese built Buick models, though it doesn't seem like the Trump administration is willing to grant them.

Volvo will now have to make further changes to its production plans according to Automotive News. The plans have been carefully formulated to dodge tariffs where possible.

Volvo's first move was to cancel plans to export the US-built S60 sedan to China just six months after the company's South Carolina plant began producing cars. This may sound like good news - fewer cars being exported to China - but it means fewer American exports as well as fewer jobs at Volvo's factory in South Carolina. Instead of shipping cars to China, Anders Gustafsson, Volvo's US president, says the plant will mostly focus on supplying cars for the US market.

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The Swedish automaker will also stop importing Chinese-built XC60 crossovers and dramatically cut back on importing Chinese-built S90 sedans to the US. We aren't sure how this will affect the company's supply chain, though we assume Volvo's factories in Europe will pick up the slack.

Shifting production like this must be a logistics nightmare and it can not be good for Volvo's profit outlook. Gustafsson said "We’ll go at this change not with a smile, but we know what we need to do. We have a global manufacturing structure that helps us maneuver in these tough waters.”

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