Volvo experiences substantial loss in Q2 due to increased tariffs and reduced demand
Volvo Cars, a subsidiary of the Chinese Geely group, has announced a series of significant changes in response to the impact of US tariffs on the automobile industry. The Swedish automaker has announced that it will be producing its SUV XC60 in the US from late 2026, marking a future development for the company.
The cost-cutting measures announced by Volvo are part of a broader strategy aimed at addressing its Q2 losses. The company reported a loss of 8.1 billion Swedish Krona (€720 million) in Q2 (April to June) 2021. The loss includes costs related to job elimination, with 3,000 jobs, primarily in Sweden, set to be cut. Volvo announced a cost-cutting program of 18 billion Krona at the end of April.
The high US tariffs on cars have been identified as a significant factor in Volvo's Q2 losses. Since early April, a 25% surcharge has been applied to auto imports into the US. The tariffs have posed challenges for Volvo in balancing production with demand, as increased prices could deter consumers and lead to inventory surpluses.
The CEO, Hakan Samuelsson, attributed the loss to weak demand, US tariffs, increased competition, and the economic climate. Volvo also cited delays in the development of its new large electric SUV EX90 as another factor affecting its Q2 results.
The production shift of the SUV XC60 to the US is a strategic move aimed at mitigating the impact of US tariffs. Volvo Cars, like other European brands, could face significant challenges due to tariffs, with some brands experiencing price increases of over 20%. However, specific data on Volvo Cars is not currently available.
The ongoing uncertainty and potential legal challenges surrounding tariffs may continue to affect the industry's stability and pricing strategies. As automakers adjust to these changes, companies like Volvo will need to adapt their strategies to maintain competitiveness in the US market.
[1] Source: Center for Automotive Research [2] Source: CNBC [3] Source: Forbes
- The community policy implemented by Volvo Cars, which includes cost-cutting measures and strategic production shifts, is a response to the impact of US tariffs on the automobile industry and the financial losses reported in Q2.
- Volvo Cars, in an attempt to mitigate the impact of US tariffs on the finance sector of the transportation industry, has announced a shift in the production of its SUV XC60 from Sweden to the US, starting from late 2026.
- The employment policy of Volvo Cars, which includes job elimination and cost-cutting programs, was implemented as a part of a broader strategy to address the challenges posed by the US tariffs, increased competition, weak demand, and economic climate within the automotive industry.
