Volvo profits hit by higher tariffs, launch costs
Geely's Volvo Cars, which postponed plans for a public stock offering this year, reported a nearly 50 percent decline in quarterly operating income, hurt by costs from product launches and the impact of higher tariffs.
The company said operating income fell to 1.84 billion Swedish crowns ($201.5 million) in the quarter ended Sept. 30, from 3.67 billion Swedish crowns a year earlier.
Carmarkers have issued a string of warnings in recent weeks as the introduction of tougher European regulations on emissions has further clouded the outlook for the auto industry, which is already grappling with the impact of an escalating trade war and slower growth in China.
Volvo said on Friday slowing economic growth and intensifying trade challenges have hurt demand for passenger cars in China, but consumer appetite in its biggest market remained strong for its premium models.
It forecast continued strong profits and growth in revenue and retail sales in 2018, supported by its renewed product portfolio and lower capital expenditure.
However, CEO Hakan Samuelsson said the ongoing trade tension between the U.S. and China remained a worry for the company.
"The best way forward should be open, balanced trade with no car import duties for EU, U.S. and China," he said.
The company, which opened its first U.S. plant this year and is now ramping up S60 production, said it had adjusted prices in certain markets, reallocated vehicles to other markets and shifted production in response to higher tariffs.
Volvo has sought exemptions on imported vehicles and is shifting output of the XC60 for the U.S. market to Europe from China to avoid Washington's new duties on Chinese imports.
A company spokesman said Volvo had begun moving XC60 production from Chengdu, China, to Torslanda, Sweden, and expected that by the end of the year the biggest chunk of U.S. exports of the model would be from Sweden.
The spokesman declined to specify the current split between U.S. exports from China and Sweden but said whether all production will be moved to Sweden will depend on Volvo’s ability to find the right suppliers.
To free up space in the Swedish plant, Volvo has moved production of V60 to Ghent, China and Belgium, he said.
Carmarkers have issued a string of warnings in recent weeks as the introduction of tougher European regulations on emissions has further clouded the outlook for the auto industry, which is already grappling with the impact of an escalating trade war and slower growth in China.
Volvo said on Friday slowing economic growth and intensifying trade challenges have hurt demand for passenger cars in China, but consumer appetite in its biggest market remained strong for its premium models.
It forecast continued strong profits and growth in revenue and retail sales in 2018, supported by its renewed product portfolio and lower capital expenditure.
However, CEO Hakan Samuelsson said the ongoing trade tension between the U.S. and China remained a worry for the company.
"The best way forward should be open, balanced trade with no car import duties for EU, U.S. and China," he said.
The company, which opened its first U.S. plant this year and is now ramping up S60 production, said it had adjusted prices in certain markets, reallocated vehicles to other markets and shifted production in response to higher tariffs.
Volvo has sought exemptions on imported vehicles and is shifting output of the XC60 for the U.S. market to Europe from China to avoid Washington's new duties on Chinese imports.
A company spokesman said Volvo had begun moving XC60 production from Chengdu, China, to Torslanda, Sweden, and expected that by the end of the year the biggest chunk of U.S. exports of the model would be from Sweden.
The spokesman declined to specify the current split between U.S. exports from China and Sweden but said whether all production will be moved to Sweden will depend on Volvo’s ability to find the right suppliers.
To free up space in the Swedish plant, Volvo has moved production of V60 to Ghent, China and Belgium, he said.
