Monday 27 January 2020

Chinese-owned Volvo shifts production to avoid US tariffs

Volvo chief Hakan Samuelsson
Volvo chief Hakan Samuelsson

Laurence Frost

Volvo Cars is juggling production of its top-selling SUV to avoid US import tariffs, chief executive Hakan Samuelsson told Reuters yesterday, as the Swedish car-maker set its sights on a fifth straight year of record sales.

The company is shifting XC60 SUV production for the US market to Europe from China to avoid Washington's new duties on Chinese imports, Mr Samuelsson said in an interview after unveiling a 29pc increase in second-quarter operating profit.

Volvo, whose Chinese parent Geely is weighing up a stock market listing for the company, currently builds the compact XC60 in Sweden for European customers and in China for that market and others including the United States.

"We will of course reshuffle here and take XC60s for the US ... from our factory in Europe, and let China produce for other markets," the CEO said, adding that the shift had begun.

Chinese XC60 production previously shipped to US dealers would be reallocated to markets including Europe, he said.

Acquired by Geely in 2010, the premium car manufacturer has achieved four straight record sales years, raising its game against bigger rivals Mercedes and BMW.

Net income rose 40pc to 3bn Swedish crowns (€288m) in the three months ended June 30 on revenue of 66bn, up more than a quarter.

Operating profit amounted to 4.2bn crowns, with 3.7bn in positive free cash flow.

Geely has hired Citigroup, Goldman Sachs and Morgan Stanley to prepare Volvo for a stock-market flotation this year, Reuters reported in May, which could value the firm anywhere between $16bn to $30bn.

Pledging to hit a fifth record in 2018, Samuelsson said Volvo was "well positioned for a new period of sustainable global growth".

The company recently opened its first US plant, in South Carolina, now ramping up S60 sedan production.

While the $1.1bn US investment offers some respite from rising trade barriers, the company remains dependent on importing SUVs and large sedans into its fastest-growing market. Volvo's US sales rose 40pc in the first half. (Reuters)

Irish Independent

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