Volvo Suspends U.S. Car Production Amid Parts Shortage
Volvo Cars has temporarily halted production at its Ridgeville, South Carolina, facility due to a parts shortage. The plant, which produces the EX90 electric vehicle, faced a short shutdown but was able to restart operations soon after fixing the issue. In this article, we will look at the details of the temporary suspension by Volvo.
The pause in production was announced on Thursday, and work resumed by Saturday. Volvo explained that the shutdown was caused by a lack of certain components. The EX90 is built in the U.S. but depends on a global supply chain, with 20-25 percent of its parts coming from the U.S. or Canada, 30 percent from Mexico, and another 30 percent from China, while the transmission is made in Sweden.
This situation highlights the difficulties automakers encounter with changing trade policies. The revised tariffs set by the U.S. president, Donald Trump, apply a 30 percent tariff on Chinese imports and a 25 percent tariff on foreign auto parts. This increase in tariffs has made supply chains more complicated and raised production costs.
In response to these challenges, Volvo announced layoffs affecting approximately 125 employees at the Ridgeville plant, which represents roughly 5 percent of its workforce there. Globally, the company plans to cut 3,000 jobs, primarily in Sweden, as part of a broader cost-reduction strategy aimed at saving nearly 2 billion USD (approximately 16,000 INR).
The United States is Volvo's second biggest car market, holding a 16 percent share, with China leading at 20 percent. Additionally, there are reports of a possible ban in the U.S. by 2027 on automakers owned by Chinese companies, which may affect Volvo's future in the U.S.
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