Volvo Worried About Possible Import Tax in U.S.

Volvo Cars would be hit hard if the U.S. imposes a new tax on the importing of certain goods, even as it prepares to hire as many as 4,000 workers for its new facility in South Carolina, said its head of operations in North America.

Volvo, a brand from Sweden owned by Geely Automobile Holdings in China, is worried about the trade restrictions like the proposed border adjustment tax from the White House and some congressional Republicans.

It is bad business for the company unless the company puts more money into the price of the vehicles, said the North America Volvo CEO Lex Kerssemakers. The customer he added would be the ultimate loser or we would be if vehicles are not purchased, so everyone loses.

Volvo is planning to open its new factory in South Carolina that cost $500 million late next year. The facility, the only one in the worldwide network of the automakers to build its S60 sedan, will employ to start 2,000 workers but eventually will have 4,000 employees.

The company is also planning to make the final assembly of a second, but not yet specified vehicle at the same plant.

Volvo in 2014 made the decision to locate its first factory for North America in the U.S., which is its second largest market behind just China, rather than in Mexico.

Volvo joins a number of European and Asian auto assemblers as well as parts makers that invested in factories across the southern part of the U.S.

Plants in that area of the U.S. and Mexico contributed to a drop in auto workers in states in the Midwest like Wisconsin, Indiana, Ohio and most of all Michigan that were pivotal in the campaign of President Trump during last year’s election campaign.

Trump has pressured automakers to create new jobs inside the U.S. and warned then he could tax them on their vehicles made in Mexico and imported into the U.S.

Even after the plant of Volvo in South Carolina is operating, the company will still import a number of its different models to be sold in the U.S.

Kerssemakers said the U.S. was the only place the company would build its S60 anywhere in the world. People have turned to SUVs, but the U.S. sedan market is the third or fourth largest part of the market.

Economic impact for South Carolina thanks to the new plant should be as much as $4.8 billion.

Latest News

Leave a Reply