Volvo Cars pauses sales of some cars in US as tariffs pinch profits

Reuters

a day ago

STOCKHOLM, July 16 (Reuters) - Volvo Cars (VOLCARb.ST), opens new tab said it has scaled back its U.S. model lineup this year, among the first examples of a major automaker halting U.S. shipments as President Donald Trump's tariffs make it harder to sell a broad range of vehicles profitably.
The Swedish carmaker, which is owned by China's Geely Holding, told Reuters this week that it has been pulling sedans and station wagons from its U.S. portfolio as interest has waned.
Volvo, which releases quarterly results on Thursday, is one of the most exposed automakers to rising tariffs as the majority of its vehicles are produced in Europe or China.
Import duties on vehicles made outside of the United States that were imposed on April 1 have made market conditions more challenging for foreign sellers to the U.S. market.
U.S. tariffs of 27.5% on European-made cars and over 100% on Chinese imports have forced automakers to rethink their product strategies, with Aston Martin (AML.L), opens new tab
limiting U.S. exports and Nissan (7201.T), opens new tab
suspending U.S. production of Canadian-bound cars.
Industry experts have warned that automakers that cannot absorb the cost of border taxes themselves or pass it on to consumers will simply stop selling those models in the U.S. market. Other industries, such as apparel and toys, are experiencing similar effects.
"If you're going to reduce sales to the U.S., then you'd want to eke more value out of the sales that you do," said Andy Leyland, co-founder of supply chain specialists SC Insight.
Volvo Cars will now only sell around half of its 13-model global lineup in the U.S. market. Other than its V60 station wagon, it will exclusively sell SUVs in the country.
That means that sedans will no longer be sold in the U.S. Production of the S60 at Volvo's South Carolina plant stopped last year, sales of the China-made S90 have been halted and Volvo said on Monday the new ES90 sedan cannot be sold profitably in the country.
Globally, it is also dropping one of its last remaining station wagons, the V90, as demand declines.
Volvo Cars told Reuters its European-made electric EX40 had also been temporarily halted, but it would resume sales "shortly". The company did not provide a reason.
Even Volvo's ambitions for its flagship budget SUV, the EX30 - meant to be a big U.S. seller - have been curtailed.
Volvo only offers the pricier dual-motor version at $46,195 to U.S. buyers rather than the cheaper single-motor version, with a promised sticker price of $35,000, similar to Tesla's (TSLA.O), opens new tab Model 3.
When faced with tariffs, carmakers tend to focus on selling high-margin models, but Andy Palmer, former CEO of Aston Martin, said such a strategy could have mixed results.
"Some (customers) will either go to a different company" or be forced to buy a model "they didn't necessarily want or need," Palmer said.
Bill Wallace, owner of Wallace Automotive Group that sells Volvos in Florida confirmed shoppers are quick to pick other brands.
"At the end of the day, even with a luxury model, they are going to compare their payment with a BMW, Lexus or a similar model ... and if it's a little bit higher ... you're just gonna lose the business," he said.
Since 2022, Volvo has been hit by software bugs, supply chain snags, and tariff-related delays that slowed the rollout of its flagship electric EX30 and EX90.
By the time deliveries began in 2024, EV demand had cooled, prices had spiked and new tariffs had kicked in.
"Customers love them(Volvo), but they are just at the wrong place at the wrong time right now, Wallace said.
Although it is produced at Volvo's U.S. factory in South Carolina, the high-end EX90 is hurt by tariffs because most of its components are European-made, which are now subject to 25% tariffs.
The EX90 starts at $81,290 but struggled to gain traction with U.S. consumers, with less than 2,000 sold in the first half of 2025. Its South Carolina factory can make up to 150,000 of the cars annually.
The company said on Wednesday it would add its popular SUV XC60 hybrid to the factory in 2026.
($1 = 9.7454 Swedish crowns)