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US tariffs force Volvo Cars to focus on high-margin models

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Suspends sale of several sedans and station wagons

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Volvo's EX90 struggles exacerbated by European component

tariffs

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Company will add popular mid-sized SUV hybrid XC60 to US

production

By Marie Mannes

STOCKHOLM, July 16 (Reuters) - Volvo Cars

said it has scaled back its U.S. model lineup this year, among

the first examples of a major automaker halting U.S. shipments

as President Donald Trump's tariffs make it harder to sell a

broad range of vehicles profitably.

The Swedish carmaker, which is owned by China's Geely

Holding, told Reuters this week that it has been pulling sedans

and station wagons from its U.S. portfolio as interest has

waned.

Volvo, which releases quarterly results on Thursday, is

one of the

most exposed automakers

to rising tariffs as the majority of its vehicles are

produced in Europe or China.

Import duties on vehicles made outside of the United States

that were imposed on April 1 have made market conditions more

challenging for foreign sellers to the U.S. market.

U.S. tariffs of 27.5% on European-made cars and over 100% on

Chinese imports have forced automakers to rethink their product

strategies, with Aston Martin limiting U.S. exports and

Nissan ( NSANF ) suspending U.S. production of Canadian-bound

cars.

Industry experts have warned that automakers that cannot

absorb the cost of border taxes themselves or pass it on to

consumers will simply stop selling those models in the U.S.

market. Other industries, such as apparel and toys, are

experiencing similar effects.

"If you're going to reduce sales to the U.S., then you'd

want to eke more value out of the sales that you do," said Andy

Leyland, co-founder of supply chain specialists SC Insight.

Volvo Cars will now only sell around half of its

13-model global lineup in the U.S. market. Other than its V60

station wagon, it will exclusively sell SUVs in the country.

That means that sedans will no longer be sold in the

U.S. Production of the S60 at Volvo's South Carolina plant

stopped last year, sales of the China-made S90 have been halted

and Volvo said on Monday the

new

ES90 sedan cannot be sold profitably in the country.

Globally, it is also dropping one of its last remaining

station wagons, the V90, as demand declines.

Volvo Cars told Reuters its European-made electric

EX40 had also been temporarily halted, but it would resume sales

"shortly". The company did not provide a reason.

Even Volvo's ambitions for its flagship budget SUV, the

EX30 - meant to be a big U.S. seller - have been curtailed.

Volvo only offers the pricier dual-motor version at $46,195 to

U.S. buyers rather than the cheaper single-motor version, with a

promised sticker price of $35,000, similar to Tesla's

Model 3.

When faced with tariffs, carmakers tend to focus on

selling high-margin models, but Andy Palmer, former CEO of Aston

Martin, said such a strategy could have mixed results.

"Some (customers) will either go to a different company"

or be forced to buy a model "they didn't necessarily want or

need," Palmer said.

Bill Wallace, owner of Wallace Automotive Group that sells

Volvos in Florida confirmed shoppers are quick to pick other

brands.

"At the end of the day, even with a luxury model, they

are going to compare their payment with a BMW, Lexus or a

similar model ... and if it's a little bit higher ... you're

just gonna lose the business," he said.

Since 2022, Volvo has been hit by software bugs, supply

chain snags, and tariff-related delays that slowed the rollout

of its flagship electric EX30 and EX90.

By the time deliveries began in 2024, EV demand had cooled,

prices had spiked and new tariffs had kicked in.

"Customers love them(Volvo), but they are just at the wrong

place at the wrong time right now, Wallace said.

Although it is produced at Volvo's U.S. factory in South

Carolina, the high-end EX90 is hurt by tariffs because most of

its components are European-made, which are now subject to 25%

tariffs.

The EX90 starts at $81,290 but struggled to gain traction

with U.S. consumers, with less than 2,000 sold in the first half

of 2025. Its South Carolina factory can make up to 150,000 of

the cars annually.

The company said on Wednesday it would

add

its popular SUV XC60 hybrid to the factory in 2026.

($1 = 9.7454 Swedish crowns)