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Volvo warns of crunched car line-up if UK splits from EU rules

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Via Financial Times

Volvo will be forced to scale back its UK model line-up if Britain significantly diverges from EU rules after Brexit, the carmaker’s chief executive has warned.

Hakan Samuelsson said certifying some cars for the British market would not be worth the cost if rules differed dramatically from the EU’s. The comments mark the first time the head of a big carmaker has warned of reduced consumer choice if Britain presses ahead with plans to carve out its own standards.

“If that happened it would be very negative, the number of cars for UK consumers would be much smaller than today,” he said, adding that it would be “very, very costly” to make cars compliant with a new set of rules.

Last weekend Sajid Javid, UK chancellor of the exchequer, told the Financial Times Britain intended to split from EU regulations, becoming a “rulemaker” and forcing companies to “adapt” to a new environment.

The comments sparked alarm in some parts of business community and he was forced to clarify on Thursday that the UK only wanted the freedom to set its own rules, and was not deliberately seeking to ditch Brussels guidelines.

Hakan Samuelsson, chief executive officer of Volvo Cars NV, stands for a photograph after the unveiling of the XC40 Recharge electric sports utility vehicle (SUV) in Los Angeles, California, U.S., on Wednesday, Oct. 16, 2019. Volvo is tying the launch of its first all-electric vehicle to a broader plan for shrinking the carbon footprint of its models by 40% through 2025. Photographer: Patrick T. Fallon/Bloomberg
Hakan Samuelsson said he was ‘disappointed’ the UK did not vote to remain in the EU and that the bloc was weaker without Britain © Bloomberg

Steve Barclay, Brexit secretary, told the BBC’s Andrew Marr programme on Sunday that Britain was particularly interested in setting its own rules in areas of new technology “where we want to move quickly” but played down the idea that the UK would diverge greatly on existing rules. “We’re not going to diverge just for the sake of it,” he said.

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More than 2m cars are imported into the UK a year, with two-thirds coming from Europe.

British cars have the same standards as EU vehicles but if UK rules change significantly after Brexit, carmakers will be forced to pay for additional crash tests and customised emissions systems to make them compliant, something that would potentially cost each company millions and make them question the viability of servicing the UK market.

Mr Samuelsson said a system in which Britain accepted EU rules as well as its own would allow carmakers to continue selling vehicles into the market without extra costs.

56,000


Number of cars sold in the UK last year

He said he was “disappointed” the UK did not vote to remain in the EU and that the bloc was weaker without Britain, adding that his native Sweden and the UK had often voted along the same lines on key topics.

Volvo, which is owned by China’s Geely, last year sold a record 700,000 vehicles worldwide, including 56,000 in the UK, the best year for the Swedish brand since 1990.

In an interview that also covered electric vehicles and the carmaker’s ambitions for a quarter of its cars to be hybrid this year, Mr Samuelsson said the global trade war had reached a “ceasefire” but not yet reached a “peace treaty”.

Volvo has plants in Europe, China and the US, and was forced to reallocate some of its production in response to the trade war between the US and China.

He stressed that countries or trading blocs that impose tariffs on imported vehicles to protect their own industries were “not very smart”, singling out China and Europe for imposing levies on foreign-built vehicles.

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While the EU charges 10 per cent on cars coming in and China’s tariffs are 25 per cent, the US levies are much smaller at 2.5 per cent.

“The US is a more open market,” he added. “We should not go in the direction of 25 per cent but in the direction of 2.5 per cent or, even better, zero.”

Additional reporting by George Parker in London

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