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Volvo Automobiles will e-book a one-off cost of SKr11.4bn ($1.2bn) because the Swedish group forecast smaller earnings from two important car fashions as a consequence of US President Donald Trump’s automobile 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 reduce of three,000 jobs globally to avoid wasting prices.
Volvo Automobiles on Monday blamed the non-cash impairment cost on launch delays and extra growth 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 because of the 25 per cent tariffs Trump has imposed on imports of foreign-made automobiles.
The group has mentioned it needs 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 in addition 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 resembling import tariffs within the US, growth and launch delays for the EX90 and strategic funding prioritisations, now we have reassessed quantity assumptions for these two vehicles,” mentioned Fredrik Hansson, chief monetary officer at Volvo Automobiles. This has led to “decrease than deliberate lifecycle profitability”, he added.
To handle 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 yr.
Past the tariffs, the carmaker was additionally compelled to quickly pause manufacturing at its Charleston, South Carolina, plant in Could as a consequence of a provider concern, 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 shall be launched on Thursday, would most likely be the weakest for the corporate for 2025, with gross margins prone to fall to 16 per cent from 18 per cent within the earlier quarter.
“Volvo will really feel the total impact of EU-China and EU-US tariffs earlier than mitigations begin to kick in from third quarter,” he added.
Shares in Volvo Automobiles fell 4.4 per cent on Monday following Trump’s tariff risk on the EU, bringing its year-to-date decline to 25 per cent.
