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This automaker's tariff exposure is off the charts—here's how savvy dealers are combatting it

Trade wars, tech bans, and a factory in limbo

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Welcome to The Breakdown, an analysis of auto retail’s top trends, moves, and insights—in under 5 minutes.

Volvo is walking a tightrope.

And dealers are caught in the crossfire.

But inside the stores, they’re doing what they always do: adapting. From leasing to service, they’re protecting margin, moving volume, and staying ahead—no matter how the tariffs and EV policy shake out.

Here’s what surfaced from my conversations with Volvo dealers this week…

The risk: Volvo's Charleston, S.C., plant has run below capacity for years.

Today, it produces just two vehicles—the EX90 and the Polestar 3. Both are new(ish). Both are electric. And both are ramping up slowly.

Then came the tariffs.

On April 3, tariffs hit imported vehicles. A new round of parts duties followed on May 3. Add a 125% tariff on Chinese-built cars, and Volvo has tough calls ahead. Last year, 16% of its revenue came from the U.S….

Volvo Cars’ revenue sources in 2024 via Reuters

In response, Volvo leadership announced plans to add another model to the plant.

Riley Volvo Cars Stamford

“They built that factory to be flexible,” said Jameson Riley, GM of Riley Volvo Cars Stamford. “And it’s barely being used, but the equipment is there. At this point, it’s just a matter of whether Volvo’s willing to make the investment.”

Randy Carlton, GM of Volvo Cars Bellevue, had the same read when he visited the plant last fall.

“They didn’t announce anything specific at the time, but it was clear they were preparing to bring in suppliers,” he told me. “The only thing that’s changed now is the pressure to act."

Which model is coming? Dealers have no clue.

But in April, just 65 S60 models (being discontinued after 2025) and 88 S90 sedans were sold in the U.S.—less than 1.4% of Volvo’s total volume. Meanwhile, the XC60, XC90, and XC40 SUVs made up 87% of sales.

“We don’t sell sedans,” said Matthew Haiken, Dealer Principal at Prestige Volvo Cars East Hanover. “Everything is XC60, XC90, XC40. That’s what our customers want.”

Those are the vehicles that could define Charleston’s future, and Volvo needs one in production fast.

From the dealership floor: To get ahead of the impact, Randy rolled out a an aggressive marketing campaign: “Get your car before the tariffs hit.” The message successfully pulled demand forward. And then, Randy briefly raised used car prices to test elasticity—but slower turn hurt fixed ops revenue, so he reset. Once prices came back down, volume rebounded.

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The play: For luxury brands like Volvo, leasing defines the entire vehicle lifecycle.

Volvo has long been a leasing brand—and dealers are doubling down.

“We’re a leasing-first store,” said Jameson. In 2021, his store hit 93% lease penetration—the highest in the country. That number has since cooled, but the strategy holds.

After all, today’s lease is tomorrow’s certified pre-owned car…

“We typically put $1,000 to $1,500 into reconditioning and price the car $3,000 to $4,000 below a comparable new unit,” Jameson told me. “That delta is the value.”

Randy’s store retailed over 100 certified units last year—top 10 nationally.

“We aim for 30-day turns on all our CPO,” he said. “We’ve had to go outside our region to keep volume up—buying from other dealers, from Volvo 360, wherever we can.”

Volvo Cars Bellevue

He’s also exploring a CPO lease program modeled after Mercedes-Benz.

But he told me, “There’s no plug-and-play model. You need the right desk, the right underwriter, and a customer base that understands what they’re getting.”

Prestige Volvo

Matthew's store is one of the few Volvo rooftops actually offering a formal CPO lease today. But he told me that’s not the smart play for his store right now.

Instead, his team is focusing on acquiring the right CPO cars, only stocking Volvos, and reconditioning everything in-house.

The goal: Keep margins strong, keep turn tight, and make sure every certified unit looks and drives almost like new.

From the dealership floor: Another example? Randy will buy back a CPO car (for full purchase price) or comp repairs (even months after the sale) if it keeps a high-value customer in his fixed ops pipeline.

The future: Geely’s ownership and a potential EV policy reset are impossible for Volvo dealers to ignore.

President Trump has promised to eliminate the $7,500 EV tax credit and roll back Biden-era emissions rules—both foundational to Volvo’s U.S. EV sales strategy.

On top of that, the U.S. Department of Commerce finalized new rules banning connected vehicles (2027 model year) built by companies “owned, controlled, or directed” by foreign adversaries (including China).

“There’s a lot of data that can be pulled from these cars,” said Randy. “With TikTok, the concern was where the data was going. What happens if that logic gets applied to the tech in our cars?”

Volvo didn’t go into detail about the the risk during Randy’s most recent regional meeting—“but it was clear it’s what they were worried about.”

From the dealership floor: Still, none of the dealers I spoke to are in full on panic mode. They're sticking to what they control. Like how Jameson reviews his org chart monthly, especially in the back office, to see where technology can helped him reduce overhead.

Big picture: Volvo is straddling two potential outcomes.

The U.S. wants fewer imports. China wants more control. And electrification no longer guarantees political cover or pricing power. But the dealers closest to the action are betting on the fundamentals. They’re using every lever to stay ahead: pushing leasing, owning their certified pipeline, and building margin in fixed ops.

The politics may be global. But the real fight is local.

How is your dealership tackling tariff uncertainty? Hit Reply and let me know.

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—Car Dealership Guy

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