Volvo CEO urges EU to slash its tariffs on US vehicles: ‘Absolutely unnecessary'
The automaker, which is majority-owned by China's Geely Holding, currently faces a steep 27.5% tariff on its imports.
The EU, meanwhile, has a 10% tariff on American-made cars.
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3 Volvo CEO Hakan Samuelsson urged the EU to slash its auto tariffs on the US.
via REUTERS
'If Europe is for free trade, we should be the ones showing the way and going down to very low tariffs first,' Samuelsson told Reuters during an interview Thursday.
'I think it's absolutely unnecessary, the European car industry definitely does not need to have any protection from American auto builders,' he told Reuters on Thursday.
Trump has touted the auto tariffs as a success, arguing that they have incentivized manufacturers to return to the US.
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He has threatened to raise the taxes on EU-made vehicles to 30% starting August 1.
In April, he slapped a 25% tax on auto imports, which stacked on top of a 2.5% tariff that was already in place.
The president has also hit auto parts with extra levies.
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Prior to Trump's second term, the US had just the 2.5% tariff on EU-made cars while the 27-nation trade bloc had a 10% duty on American-made vehicles – which Samuelsson has called unfair.
3 New Volvo automobiles await transport at a terminal in Baltimore, Maryland.
JIM LO SCALZO/EPA-EFE / Shutterstock
Volvo is particularly exposed to the tariffs, as most of its cars sold in the US are imported from Europe.
As a result, the automaker is planning to move some manufacturing plans to the US.
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It announced Wednesday that it would start production of its best-selling hybrid XC60 in the US next year.
The brand's South Carolina plant currently produces just the Polestar 3 and EX90, an electric vehicle that has struggled to gain sales traction in the US.
But the automaker has also started to cut down on its offerings in the US, according to Reuters.
'These are the measures we have control over, rather than when it comes to tariffs we can only have an opinion like everybody else,' Samuelsson said.
3 President Trump unveiled hefty tariffs on many nations in April.
AFP via Getty Images
Shares in Volvo plummeted 2.6% Wednesday after the company reported a sharp drop in quarterly profit, even though it beat analyst expectations.
The automaker reported second-quarter adjusted operating profit of 2.9 billion Swedish crowns, or $297.06 million, down massively from 8 billion crowns, or $819.48 million, the year before.
Its gross margin fell to 13.5% from 18.2% the quarter before, though it stood at 17.7% when adjusted for one-off impacts.
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Extra costs from tariffs, as well as increased Chinese competition and muted demand for electric vehicles, made for a difficult quarter.
Volvo announced a $1.2 billion impairment charge related to delays in model launches and tariffs, leading to an operating loss of 10 billion crowns, or $1.02 billion. That's up from 8 billion crowns in the same period last year.
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