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Volvo Cars` Hakan Samuelsson Intvd on Bloomberg TV

HAKAN SAMUELSSON, CEO, VOLVO CARS, IS INTERVIEWED ON BLOOMBERG TV

MARCH 7, 2017

SPEAKERS: HAKAN SAMUELSSON, CEO, VOLVO CARS

MATT MILLER, BLOOMBERG NEWS

GUY JOHNSON, BLOOMBERG NEWS

[*] MILLER: So there you have it, and those are questions obviously, I'm going to continue to ask, but right now, I want to talk to the head of a carmaker you probably think of as kind of a luxury family carmaker, but they also happen to make the only engine I know that uses both a turbocharger and a supercharger. Hakan Samuelsson here from Volvo, thanks very much you for your time. Let me kick it off with the -- with the Trump questions and get the political stuff out of the way first. How will Volvo react, because the U.S. is such an important market and becoming even more important with the success of the XC90 and the new S and P90s. How -- how would Volvo react to a border tax in the U.S.?
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SAMUELSSON: Yes. Let's see first how that's going to be decided, and we will react to that. But I think first one thing is we are not building a factory in South Carolina. We took that decision a couple of years ago, and I thought then, it was very important to -- to come closer to U.S. customers, so that's why we chose to build it in South Carolina and not in Mexico which of course, was the option, and right now, I really don't regret that decision. So we are in the U.S., and we are also planning to export also that factory, so if you look into our potential future trade balance, it will be rather level. So I mean, we are -- are going to build in the U.S., more or less, the same number of cars that we're going to sell in the U.S., but some models, we had to swap -- so we will export out of South Carolina, and we will import some others from Europe or China, but more or less in the same amount. So I think we are doing trade in a very fair way and very level way.

MILLER: Are you confident that you'll be able to get an agreement that the industry will be able to get an agreement with the Trump administration on fair trade?

SAMUELSSON: We never know, we have to look into that, but I think always, our concept has always been not just importing cars into the U.S., but also exporting out of South Carolina. I think that is something that's good for us, and I think also good for -- for jobs in the U.S. So I mean, we are creating really, jobs in the U.S. by using free trade and exporting.

MILLER: So yes, I know you're going to create about 4,000 jobs with this factory. Let me bring it back here to Europe and ask you about one of the issues that's been on everyone's mind. Opel Vauxhall getting sold to Peugeot. Does that mean to you that there too many brands in Europe that you need size, maybe, because they are now becoming the second biggest?

SAMUELSSON: Yes. I think you have to -- I mean, every company has to have their strategy, but of course, I mean, labor costs are very high in Europe, and then you have to react to that. I mean, our answer is really, we are focusing on the premium segment, so we think we can be more competitive by delivering value, working on the value side, on the price side with our cars, that's why we have chosen a premium strategy. But of course, for other manufacturers, the other way is of course, are to focus on the cost side and then you need high volume and you need a lot of common parts, so I would assume that's probably what PSA and Opel is after.
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MILLER: You may achieve high volume with a car that we see shrouded behind you in this Zeppelinesque silk cover, it's the new XC60, we'll see it a little bit later. Are you -- what kind of volume are you looking for for that? How much is that going to add to tour sales?

SAMUELSSON: It is really -- I mean, we have an ambition, we are at around 550,000 right now, and we want to be around 800,000, 2020, and really then, we need to grow and -- and then of course, SUVs are really, our possibility to really bring in volume. And already today, we -- we sell half of -- of our production to SUVs. And with this, of course, that proportion will -- will increase, so -- but it's a very important model, it's about 30 percent of our total sales. It's already today, this XC60 model, and with a new beautiful one you will soon see, that should raise.

MILLER: So -- and you've -- you've already been extremely successful with the new XC90, the bigger SUV, does this success and -- and all the freedom you have with your credit profile lead you to think, "You know, we should really sell shares in this company?"

SAMUELSSON: That's -- that's of course, an -- and option for us. I think we work as if we were listed. I think it's really good to -- to be scrutinized by the financial market, and -- and we should be transparent, we should deliver quarterly reports and everything, and -- and we -- we even do that because we are on the financial market where we issued bonds three times now, and of course, also the equity market is an option for our main shareholder mainly, it's a decision he has to take, but it's an option for the future.

MILLER: Where do you think would you choose to list?

SAMUELSSON: That is something we have to discuss if this is going to be a real option. Right now, we have no plans in -- in - in that direction.

MILLER: Let me finally ask you about China. We, over the weekend, saw a reduced economic forecast from the party. Is that a problem for you? Because I know China is such a huge market for Volvo.

SAMUELSSON: I wouldn't say it's a problem. China is our biggest market, and it there has been talks for many years now, the normalization and so on, but if you look into the premium car market last year, it grew with 15 percent, so I mean -- and it's continuing in the first months, it will continue with double digit growth in the premiums sector. So not too concerned about China, it -- it's going to be this year also, our biggest market.
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MILLER: All right. Hakan, thanks so much for your time, really appreciate it, can't wait to see the XC90 finally unveiled in just a couple hours from now. Hakan Samuelsson, the CEO of Volvo Cars. And we're going to be talking to Carlos Tavares in just a little bit from Peugeot Citroen. Guy, with that, I will hand it back to you in the studio.

JOHNSON: Looking forward to all the great conversations that are coming up out of the Geneva Motor Show, Matt Miller leading the charge.

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