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Investing.com -- The credit rating outlook for Volvo (OTC:VLVLY) Cars has been downgraded by S&P Global Ratings. The outlook was lowered from "stable" to "negative" on Friday, due to concerns over U.S. tariffs and increasing competition in the Chinese market.
S&P Global Ratings indicated in a statement that Volvo Cars’ significant exposure to U.S. import tariffs and its marginalization in the Chinese market were the primary reasons for the negative outlook. The firm also noted that they expect the automaker’s profitability and cash generation after investments to face pressure in 2025-2026. However, this pressure may be partly offset by a substantial cost reduction program.
In 2024, the United States accounted for 16% of Volvo Cars’ sales, while China represented 20%. The automaker produces only one of its models in the U.S., relying on imports for the rest. This leaves Volvo Cars more exposed to U.S. tariffs than many of its European counterparts.
S&P Global Ratings also highlighted a proposed U.S. ban set for 2027 on automakers controlled by a Chinese entity, which further weighs on Volvo Cars’ outlook. This ban could potentially impact the automaker’s future operations and sales in the U.S. market.
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