Automotive News Europe — 2025-07-17
Automotive Industry
Volvo Cars CEO Hakan Samuelsson said the European Union should reduce duties on U.S. car imports as Brussels works toward a trade agreement with Washington.
“If Europe is for free trade, we should be the ones showing the way and going down to very low tariffs first,” Samuelsson said after Volvo posted a 10 billion Swedish kronor ($1 billion) operating loss in the second quarter.
European automakers do not need protection from U.S. competitors, Samuelsson said. “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.
Controlled by China’s Geely, Volvo is one of the most exposed European automakers to U.S. tariffs as the bulk of its cars sold there are imported from Europe. In addition to a 27. 5 percent tariff imposed on European-made Volvo cars entering the U.S., it has also been hit by a 25 percent tariff on auto parts as well as on steel and aluminum.
President Donald Trump has threatened to raise tariffs on EU imports to 30 percent from Aug. 1, increasing pressure on the bloc to strike a deal. Before Trump’s tenure, the U.S. had a 2.5 percent tariff on European-made cars, while the EU had a 10 percent duty on vehicles imported from the U.S, which Samuelsson previously said was unfair.
Volvo said on July 16 that it plans to start producing its XC60, an SUV previously imported from Sweden, at its U.S. plant in late 2026 as a way to mitigate the tariffs.
Currently, its South Carolina plant only produces the slow-selling Polestar 3 and the Volvo EX90, which has struggled to gain traction with U.S. consumers. Volvo has also started slimming down its product offering in the U.S.
“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.
$1 billion loss ‘better than feared’
Volvo’s second-quarter loss was due to a previously announced $1.2 billion impairment charge over model delays and the escalating cost of tariffs.
Its gross margin, a key metric for assessing the tariff impact, dropped to 13.5 percent from 18.2 percent in the first quarter, though, adjusted for one-offs, it was 17.7 percent.
Bernstein analysts said the results were “better than feared,” adding that Volvo sold more emissions credits in the second quarter than it did all of last year.
Volvo is the first European automaker to release results in what analysts expect to be a challenging earnings season, as subdued demand for electric vehicles and intensifying competition from Chinese automakers coincide with trade tensions. The company is cutting 18 billion kronor in costs to bolster its margin and vowed that the program is on track.
Samuelsson was brought back in April by owner Li Shufu to turn around Volvo by aligning it more closely with the Geely group. He launched a cost-cutting program, pulled earnings guidance, slashed 3,000 jobs, and slowed down investments.
‘Wait and see’ mode over tariffs
Tariffs are also affecting some of Sweden’s other industrial manufacturers.
Truckmaker Volvo AB, a separate company, on July 17 flagged a stabilization in demand in Europe but warned that weak demand is persisting in North America, where it said customers remained in wait-and-see mode following Trump’s trade moves.
Tariff measures have led to lower transport volumes at some logistics companies, pushing some to halt investment in new vehicles.
Still, there are signs of stabilization in Europe where industry is getting a boost from higher defense spending. Data earlier this week showed industrial output in the 20-nation euro region rose 1.7 percent from the previous month in June, beating analyst estimates.
Bloomberg and Reuters contributed to this report.