Volvo CEO says plan for Mexico truck manufacturing facility on monitor regardless of US tariff menace

By Abhirup Roy and Marie Mannes

LAS VEGAS (Reuters) – Sweden’s Volvo (OTC:VLVLY) Group is continuing with its deliberate $700-million heavy-truck manufacturing facility in Monterrey, Mexico, CEO Martin Lundstedt instructed Reuters on Wednesday, at the same time as President-elect Donald Trump threatens to impose U.S. tariffs on imports of automobiles and different items.

The maker of Volvo and Mack semi-trucks has focused progress in North America, which accounts for about 30% of firm income, as a strategic precedence and expects the plant to begin operations in 2026. It expects the manufacturing facility to ship automobiles to the USA, Mexico and Canada, in addition to to Latin America. 

Trump has stated that instantly after his Jan. 20 inauguration, he’ll signal all needed paperwork to start charging a 25% tariff on imports from Mexico and Canada except these nations clamp down on unlawful immigration and fentanyl trafficking.

The Mexico undertaking is at an “early stage that’s persevering with,” Lundstedt stated in a Reuters NEXT Newsmaker interview on the sidelines of CES 2025, an annual tech convention in Las Vegas. He stated Volvo has choices to make use of the plant for gross sales outdoors the USA.

“This isn’t a substitute of our American services,” he stated.

Relying on what occurs with U.S. tariffs, Volvo’s Mexico manufacturing facility could or could not ship vans to the U.S., he added. 

Volvo’s U.S. factories at the moment make 100% of the vans it sells in the USA. The corporate has been investing in crops in Virginia, Maryland and Pennsylvania to broaden that capability, Lundstedt stated.

Volvo, Daimler (OTC:MBGAF) Vans North America, PACCAR (NASDAQ:PCAR) and TRATON provide practically the entire heavy-duty vans in North America, stated Erik Smith, a director within the automotive and industrial observe at AlixPartners.

Of these, Volvo is the one one with no footprint in Mexico, “which is probably going why they’re establishing one,” Smith stated.

Trump’s tariff proposals have despatched a shockwave by the auto manufacturing sector as a result of a swath of passenger automotive makers, together with BMW (ETR:BMWG), Toyota (NYSE:TM) and Basic Motors (NYSE:GM), have invested in factories in Mexico to reap the benefits of decrease labor prices and business-friendly insurance policies.

Volvo additionally has agreements to offer electrical semi-trucks to prospects resembling on-line retailing big Amazon.com (NASDAQ:AMZN) and Danish logistics agency DSV.

Lundstedt stated Volvo expects high-volume manufacturing at a deliberate battery plant in Sweden to start a few years later than the unique goal of 2029-2030.

Volvo had stated in September it could delay development of the plant by one or two years and stated on the time it was unsure if this is able to have an effect on the beginning of producing.

Volvo needs to be on the forefront of inexperienced investments, together with in zero-emissions trucking, however is refining its technique to regulate for market elements, Lundstedt stated.

That’s as a result of it doesn’t wish to be “preventing all of the windmills alone, like Don Quixote and Sancho Panza,” he stated, referring to fictional characters from the well-known novel.