Volvo's Already Shuffling Production to Avoid Tariffs

Unlike Volvo’s S90 sedan, which is built half a world away from its V90 wagon stablemate, the Chinese-owned Swedish automaker has some flexibility in where it sources its XC60 crossover. Two plants — one in China, one in Torslanda, Sweden — crank out the second-generation utility vehicle, but the U.S. market gets its full share from the Orient.

After the Trump administration imposed a tariff of 25 percent on Chinese-built vehicles, Volvo’s XC60 suddenly found itself dragging a financial anchor. Hardly a great situation for a model that outsold all other Volvos in the U.S. last month. To side-step the tariff, Volvo’s already making changes.

Say goodbye to the Chinese XC60.

According to Reuters, U.S.-bound XC60s will no longer hail from Sweden, leaving the S90, which has no other production facility, as America’s sole Chinese Volvo.

“We will of course reshuffle here and take XC60s for the U.S. … from our factory in Europe, and let China produce for other markets,” said Volvo Cars CEO Hakan Samuelsson. The shift is already underway, he added.

Some of the XC60s already on U.S. soil will be shipped to Europe to avoid unnecessary costs. “That’s the sort of fine-tuning we can do within our production process,” Samuelsson said.

Volvo recently opened its first U.S. assembly plant near Charleston, South Carolina. That facility will serve as home to the S60 sedan, as well as the next-generation XC90. With tariffs already in place between the U.S. and China, and with President Trump rattling the tariff sabre at Europe, Volvo feels the need to “ramp up Charleston as fast as we can,” Samuelsson told Automotive News Europe.

That said, the CEO claims he’s taking a wait and see approach on tariffs before considering adding the S90 to Charleston. Elsewhere in the brand’s lineup, the small XC40 crossover hails from Belgium, while the V60 wagon ( revamped for the 2019 model year) sees assembly in both Sweden and Belgium.

In June, the XC60 outsold the XC90 in the U.S. by 77 vehicles, returning a monthly tally of 3,306 vehicles. The XC60’s 14,551 year-to-date sales falls just below the XC90’s volume.

[Image: Volvo Cars]