A Volvo XC90 automobile, produced by Volvo Cars, sits on display at the Paris Motor Show in Paris. Photographer: Simon Dawson/Bloomberg
A Volvo XC90 automobile, produced by Volvo Cars, sits on display at the Paris Motor Show in Paris. Photographer: Simon Dawson/Bloomberg
INTERNATIONAL - Smaller players have been making the biggest gains in the U.S. luxury auto market this year -- a trend that could run out of gas if President Donald Trump decides to tax imported cars.

Volvo Car Group, which reported a 40 percent sales gain in the first half, has relied exclusively on imports to sell cars in the U.S. Yes, the Chinese-owned Swedish brand invested $1.1 billion in a U.S. manufacturing plant, but it just opened last month and the first model the plant will produce -- the new S60 sedan -- made up only about 8 percent of the company’s U.S. sales so far year. The next three biggest gainers, according to researcher Kelley Blue Book -- Land Rover, Alfa Romeo and Audi -- make no vehicles in the U.S.

The president has ordered an investigation into whether auto imports pose a threat to national security, using the same trade law that led to tariffs on steel and aluminum. He is said to be contemplating a 25 percent tax on all imports of cars and parts, and in tweets and speeches, he assails the number of German luxury cars he sees on U.S. streets. Industry executives, analysts and dealers -- already facing the prospect of a second year of declining sales -- have come out in force to lobby against a penalty on foreign-made cars, warning that higher costs would raise prices and that fewer models would be available.

“European manufacturers will start pruning the lines, or they’ll send things they know they can get the cost back on by charging a customer base that can handle it,” said Michelle Krebs, an analyst with car-shopping website Autotrader.

Volvo’s sales soared 35 percent in June, propelled by the top-selling XC90 sport-utility, made in Sweden, and XC60 SUV, which is made in both Sweden and China. Volvo managed to increase its U.S. market share through May by 0.15 percent, the biggest gain of any luxury automaker, to 0.54 percent, according to Cox Automotive’s KBB.

Hakan Samuelsson, the Chief Executive Officer of Volvo, said last month that he would be forced to cut some cars from his U.S. lineup if the auto tariffs come to pass.

Customers “would have less models to chose from and they would cost more,” he said at the opening of Volvo’s first U.S. assembly plant, outside Charleston, South Carolina.

Land Rover had its best ever June last month, selling 6,982 units, a 21 percent jump from 2017, thanks to its Range Rover Sport. Alfa Romeo, with its Stelvio crossover, more than doubled sales to 2,249.

While growing nicely, those brands continue to lag behind the leaders. BMW brand sales rose 1.5 percent in June to 29,407, helping it narrow Mercedes-Benz’s luxury lead this year to 5,462. The South Carolina-made X5 SUV fell 5.1 percent from a year ago, while the new X3 compact crossover jumped 50 percent. Sales are up 2.9 percent in the first half of 2018.

Daimler AG’s Mercedes-Benz brand deliveries tumbled 9.7 percent last month, the biggest drop of 2018, as sinking sales of most models overwhelmed a 77 percent jump in GLC crossovers, which are imported from Germany. Sales for the brand, which operates a factory in Alabama and has held the luxury sales crown for the past two years, are down 1.9 percent through June.

Volkswagen AG’s Audi lost steam for a second straight month, eking out a 0.3 percent increase to 19,471, after growing 0.6 percent in May. The Q5 SUV, made in Mexico, and the German-built A4 sedan drove sales, which are up 4.8 percent this year. Toyota Motor Corp.’s Lexus slipped for a fourth straight month, falling 2.6 percent to 23,750 in June. Lexus deliveries are up 0.9 percent year-to-date.

- BLOOMBERG