President Donald Trump's decision last week to delay imposing tariffs on the European Union's auto industry comes as a welcome relief to automakers, but Volvo Cars CEO Hakan Samuelsson says the potential of a trade war between the two global power players is "worrying."
“The [Trump] administration wants us to build cars in U.S. and reduce the [U.S.] trade deficit. By coincidence, we are doing exactly that,” Samuelsson told the Automotive News Europe Congress, adding that when Volvo announced in 2015 it would build a U.S. factory tariffs were not a deciding factor.
“We will eventually build 150,000 cars in the U.S. of which half will be exported. And we will sell about the same number there,” he said, referring to a sales mix of locally and non-locally built cars. “I hope the administration sees that and taxes somebody else.”
Samuelsson in February cited the ongoing trade war between the U.S. and China as one reason why Volvo's operating profit margin dipped to 5.6 percent last year from 6.7 percent in 2017.
Tension between the U.S. and China caused Volvo to adjust its production so that vehicles built in China were no longer shipped to the U.S., where they faced a 27.5 percent tariff. Now Volvo models such as XC60 SUV are going to the U.S. from Europe instead of China.
The trade war also contributed to Volvo’s decision to delay its plans for an initial public offering, which Samuelsson said is not on the agenda at the moment. "We are focusing on making Volvo great again," he said.
Samuelsson has been a key part in Volvo’s turnaround from being a money-losing unit of Ford Motor to a profit-maker that is on pace for its sixth consecutive year of record-setting sales.
Samuelsson, who took over as CEO in 2012, two years after Ford completed its sale of Volvo to Zhejiang Geely Holding, said the automaker enjoys its strong position within its Chinese owner's organization.
“Being a division is not the same as being a company,” he said during a question and answer session with Automotive News Europe President and Chief Operating Officer KC Crain.
Today the Volvo Car Group’s assets include the namesake brand, the Polestar brand for electrified performance cars, its stake in Lynk & CO and its stand-alone Volvo Car Mobility unit, which last year launched the M brand to expand the company’s global mobility operations.
When asked about Volvo’s aim to become a key player in mobility solutions Samuelsson said: “We don’t need to be too scientific. We should offer the freedom to move ... People want this freedom in a transparent way.”
