The redesigned S60 sedan that Volvo Cars builds near Charleston accounted for nearly one-fourth of U.S. sales in January as the automaker continued to build on record volumes even as profits are being squeezed by tariffs.
Volvo last month sold 1,348 sedans produced at its $1.1 billion manufacturing campus off U.S. Interstate 26. Those sales helped Volvo notch a 5.2 percent increase over last year's total despite a drop in sales of sport utility vehicles.
The numbers follow record global sales and revenue for Volvo cars in 2018, although pricing competition and expenses related to President Donald Trump's trade war trimmed profit margins to 5.6 percent — down from 6.7 percent the previous year.
Volvo CEO Hakan Samuelsson on Thursday warned profits are likely to further erode in the coming year.
"The market conditions are uncertain, you've probably heard that before," Samuelsson said during a news conference in Sweden to announce 2018 financials. "You have the trade conflict — U.S. and Europe, U.S. and China — and you have Brexit. Those are factors that will affect the whole economy, not just the car business."
Samuelsson said higher tariffs on Chinese-made cars imported into the U.S. forced Volvo to move some production to Torslanda, Sweden, which "took some time and there were costs also in this transformation."
The trade war "had a considerable impact on profitability and will not be totally mitigated going forward," he said.
However, the automaker has taken steps to offset the unexpected costs. The similar platform Volvo uses for its vehicles, for example, lets any of the company's factories switch production to any model, allowing the automaker to move cars to the lowest-cost manufacturing site.
Samuelsson said he expects another record year for global production and sales in 2019, "but we have to be realistic and acknowledge that margins will remain under continued pressure."
For 2018, Volvo reported profits of about $1.5 billion on revenues of about $27.3 billion. Sales totaled 642,253 cars, including 98,263 sales in the U.S., the company's fastest-growing market with a 20.6 percent year-over-year increase.
Anders Gustafsson, president and CEO of Volvo's U.S. operations, said 2019 "is off to a good start with our best January in a decade and solid growth posted in our retail business."
Volvo this month is expected to export the first Charleston-area built sedans to foreign markets through the Port of Charleston, although S60s for some Asian markets will be built in China because of tariff threats.
The automaker's plant near Ridgeville continues to ramp up S60 production and eventually will be able to build 150,000 cars a year when the XC90 SUV is added to the mix by 2021.
Volvo expects to employ about 4,000 people at the plant by 2021, although Samuelsson has said the number could be less if tariffs continue to disrupt production plans.