Volvo Plans Major Expansion in China

Volvo Car announces a major expansion in China with a new 100,000-unit manufacturing plant to be built in Chengdu and a possible second facility in Daqing.

The auto maker says at a news conference in Beijing it is creating an entirely new Volvo organization in China, led by Senior Vice President and Chairman of Volvo Cars China Operations Freeman Shen.

A new Volvo Car China headquarters has been established in Shanghai, including a technology center and all functions for purchasing, design, sales and marketing, manufacturing and finance.

Among other priorities, Volvo Car China also will support Volvo research and development in Sweden on electric vehicles and hybrids.

“We are increasing our business presence in China from a national sales company to an organization with all functions necessary to manage our operation in China,” Volvo Car President and CEO Stefan Jacoby says in a statement.

“Our aim is to reach a sales volume of about 200,000 cars in the Chinese market by 2015.”

Pending the approval of Chinese authorities, Volvo says it will build the plant in Chengdu, 1,000 miles (1,600 km) west of Shanghai that will solely produce Volvo cars.

China “second home market” for Volvo, says Stefan Jacoby.

“The plant is based upon a business case of approximately 100,000 produced cars annually and production is estimated to start during 2013,” the Volvo statement says.

“The board also approved a decision to continue investigating the opportunities for establishing a plant in Daqing, in northeastern China.”

The company says it is putting “full focus” on increasing sales in China and strengthening sales and marketing activities, including expanding dealers from 106 to 220 by 2015, training sales consultants and improving customer experience and satisfaction.

“Our production in China will, however, not have any impact on decisions affecting capacity utilization of our plants in Sweden and Belgium,” Jacoby says.

Lars Danielson, previously general manager of the Volvo plant in Torslanda, Sweden, is named vice president-industrial systems, including manufacturing and quality. He now is based in Chengdu and will plan the complex work involved in constructing the new Volvo plant there.

Jacoby emphasizes Volvo will continue to be a contemporary luxury brand. He says the key strategy is to continue to strengthen its business presence in mature markets such as Europe and America, while actively exploring new emerging markets.

“We regard the Chinese market as the second home market for Volvo and a very important part of the plan to build a successful future for the company,” he says.

Last year, Ford sold Volvo to China-based Zhejiang Geely for $1.8 billion.