S&P cuts outlook on Volvo over tariffs, China competition
S&P on Friday lowered the outlook for its BB+ credit rating on Volvo Cars to "negative" from "stable", saying US tariffs and tougher competition in China were hurting the company's growth prospects.
The Sweden-based carmaker, majority-owned by China's Geely, last month withdrew its earnings guidance and announced cost cuts which will include laying off about 3,000 mostly white-collar workers amid a slowdown in demand.
"The negative outlook on Volvo Cars reflects its large exposure to US import tariffs and the increasing marginalisation in the Chinese market," S&P said.
"We expect Volvo Cars' profitability and cash generation after investments to come under pressure in 2025-2026, partly alleviated by a substantial cost reduction programme."
The USs represented 16% of Volvo Cars sales in 2024, while China accounted for 20%.
Volvo Cars produces only one of its models in the US, and relies on imports for the rest, leaving the company more exposed to US tariffs than many of its European peers.
S&P said a proposed 2027 US ban on carmakers controlled by a Chinese entity also weighed on the outlook.
In the most recent twist in the trade turmoil sparked by President Donald Trump, a US court on Thursday temporarily reinstated sweeping new tariffs, a day after another US court had ordered an immediate block on them.
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