Truck maker Volvo lowered its North America market outlook in the past week, pointing to increased uncertainty around the chaotic tariffs and their impact on global trade, as the Swedish company reported a bigger-than-expected fall in first-quarter profit.
The Swedish group said it now sees the North American heavy truck market at 275,000 new vehicles this year. Its previous forecast, from January, was for 300,000.
Volvo repeated a market outlook for 290,000 new heavy trucks in Europe, adding however that current market conditions meant forecasts were subject to significant uncertainty.
U.S. President Trump announced his controversial sweeping tariffs on the day after April Fools day, with goods’ imports fuelling concern about the impact on the global economy.
Truck makers have been signalling a slowdown in the North American market although some analysts have pointed to signs of orders picking up momentum in Europe.
“The divergence in trends between the U.S. and Europe is becoming more evident,” Bernstein analyst Harry Martin said in a note, adding that the European truck order intake grew 25 per cent in the quarter, while U.S. orders expanded well below the quarter’s deliveries.
CEO Martin Lundstedt said uncertainty around trade tariffs and emissions legislation had prompted U.S. customers to adopt a wait and see approach.
He said it was too early to assess the full implications from the imposed tariffs and their impact on demand, but that Volvo was working to adapt production capacity and commercial terms to mitigate the effects.
Volvo said late last week that it would lay off as many as 800 workers at three U.S. facilities over the next three months due to the market uncertainty.
Volvo says it is still better positioned than some of its peers because its trucks business has a complete U.S.-based production chain.
Lundstedt underlined this in an analyst call, but said the tariffs could still make an impact.
Operating profit was the equivalent of $AUD2.16 billion ($US1.39 billion) against a year-earlier forecast of $AUD 3.06 nbillion( $US 1.97 billion) and a mean forecast .
Shares in Volvo fell 1.7 per centsin early trade after the announcement, but this quickly reversed course and the shares were trading up around 1.6 per cent a few hours later.
A notice in the US Federal Register said that, the secretary of commerce initiated an investigation to determine the effects on the national security of imports of medium-duty trucks, heavy-duty trucks, and medium- and heavy-duty truck parts, and their derivative products.
That is believed to open the door for sectoral tariffs, similar to the existing 25 per cent levy on all new light vehicles and the cars regular Americans buy. Those car tariffs excluded medium and heavy-duty trucks, but it looks as if that might change.
Shares of other truck manufacturers including Paccar added 4.04 per cent and engine maker Cummins went up 3.63 percent, its both expected to be affected, with Paccar stock flat in flat for the rest of the week and Cummins shares going down 1 per cent again..
Paccar stock rose again, while Cummins stock gained 1.6 per cent. no doubt helped by comments from US Treasury Secretary, Scott Bessent that indicated the U.S. would seek to de-escalate the trade war with China.
While the new notice might cause concern for investors, there was some potentially positive news about tariffs. The Financial Times reported that Trump was considering giving some tariff relief to domestic auto makers. What the relief would be wasn’t immediately clear. It appears levies linked to steel and aluminum and fentanyl won’t be stacked on top of 25 per cent sectoral tariffs on car imports.
