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Volvo unveils China investment plans

Volvo unveils China investment plans

Published: 25 Feb 2011 08:49 GMT+01:00
Updated: 25 Feb 2011 08:49 GMT+01:00

Swedish carmaker Volvo hopes to become a global luxury brand and turn China into a major manufacturing base by investing $10-$11 billion over the next five years, a report said Friday.

Volvo, which was bought by Chinese group Geely last year, plans to build a new assembly plant in the southwestern city of Chengdu as it expands its China operations, chief executive Stefan Jacoby told the Wall Street Journal.

The company wants to boost annual sales to 800,000 cars globally by 2020 -- more than double the 373,000 sold last year -- with half of that growth coming from China, the world's biggest auto market, Jacoby said in an interview.

"We're in the middle of a big transition -- a big transformation. We are redefining the brand," Jacoby said ahead of a news conference in Beijing later Friday at which Volvo and Geely will officially announce the strategic plan.

Geely, which bought Volvo from Ford in August for $1.5 billion, said in September it planned to increase Volvo sales to 300,000 cars a year in China alone.

Geely chairman Li Shufu, who is also Volvo chairman, said he wanted three new Volvo plants in China to produce that volume.

Jacoby said however the China target was 200,000 units by 2020, nearly seven times the 30,500 sold last year.

Volvo expects cars to start rolling off the assembly line in Chengdu in early 2013, which will have an initial capacity of 125,000 units a year.

Jacoby said the company was also considering exporting cars from China to the rest of Asia, as well as to North and South America.

In Europe, Volvo plans to increase sales to 380,000 cars a year from the 242,000 it sold last year and more than double sales in the United States to 120,000 units a year.

Volvo hopes markets such as Russia, Brazil and India will drive global sales outside China, the United States and Europe to 100,000 cars a year from the 46,500 it sold last year in those markets.

AFP/The Local (news@thelocal.se)

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Your comments about this article

09:25 February 25, 2011 by Pont-y-garreg
"Carmaker" is not an English word.
09:59 February 25, 2011 by isenhand
see:

http://www.merriam-webster.com/dictionary/carmaker

car·mak·er

noun \ˈkär-ˌmā-kər\

Definition of CARMAKER

: an automobile manufacturer

First Known Use of CARMAKER

1954

but shouldn't it read "Chinese carmaker Volvo"?
10:15 February 25, 2011 by miss79
yayy, we are going to give the asians the job and here we are in sweden with massor arbetslösa
10:54 February 25, 2011 by UScitizen
@miss79

The Chinese bought the company. It's only natural that they would build a plant in China and put their own people to work. If it was outsourcing it would be different.
12:24 February 25, 2011 by HYBRED
Chow Mein Volvo??
15:18 February 25, 2011 by Keith #5083
#miss79

As Sweden has been changing from an industrial based society into a more educated service and consultancy society, the 'old style factory jobs' necessarily disappear.

However,your 'massor unemployment' statement fails to recognise that unemployment in Sweden is below, that is lower than, the EU average.

Oh, and you are not 'giving' Li Shufu anything...he bought the company at a fairly high cost. His plans will revolutionise and expand the Volvo brand and the opportunities for employment in Sweden. I didn't see you and all the other complainers putting your money up to save Volvo!

He needs the European base - and the European manufacturing - as the backbone of his PR drive in China.

But,hey, if being pessimistic keeps you happy, roll on :)
15:43 February 25, 2011 by Philip21
How dumb is that to build plants that are 1700km apart !!!
18:17 February 25, 2011 by james7
As an American who is a car fanatic and long time Volvo lover, I must say that what happened to Volvo was truly sad. It was a unique brand which emphasized safety, quality, and technology, and had many automotive firsts. The Swedish government should have stepped in to save it and preserve Swedish jobs, like the US government stepped in to save General Motors. You scandinavians need to try a little socialism like the US. :))) It worked for us!!

The new Chinese owners want to build Volvo into a new luxury car brand. The world doesn't need another luxury car. Many of the existing luxury car brands are barely surviving.

I sure hope that the quality of the new Volvos built in China is better than the quality of the fake Rolex watches and fake Jeep Cherokees built in China.
20:50 February 25, 2011 by volvoman9
Face it. Volvo is now owned by the Chinese. It is a Chinese brand. The luxury car segment is certainly on the wane as is the fossil fueled transportation industry. If Geely wants to be successful they need to invest in alternative propulsion tech or die like the rest of them. I have owned seven Volvos and will lament the passing of this icon as much as any but this is progress.

The intention to increase market share by these figures indicates the methods that will be employed. Innovation and cutting edge technology is hugely expensive and unsustainable at these production figures. The Chinese will siphon the knowledge from Sweden until they have reached a comfort level and then the brand will cease to exist in Sweden. This is progress. Don't like it? Vote with your wallet next time. It is not the governments problem it is our problem.
23:52 February 25, 2011 by buschmann
Abu garcia, Volvo, and meatballs. At least you still got your meatballs!
13:27 February 27, 2011 by Marc the Texan
It's sad that Volvo is no longer Swedish, but we need to move on. Invent the next generation of brands. The Chinese are already getting a taste of this. In the Telegraph today (I won't link because I want this comment to show up), there is an article about the city in China that is the largest denim manufacturing area in the world. They produce 1/3 of the world's jeans in this city, from low end all the way up to the top end. Guess what. This town is being routed by the fact that it is now too costly to produce jeans in China. The lazy Chinese workers don't want to work for chump change any more. This is happening in a lot of industries. Many of these jobs will move to even poorer countries and raise living standards there, but it will be much more than they can handle. China is reaching the end of it's price competitiveness since excess labor is drying up. Not to mention a lot of production moved to China for massive tax breaks and lax environmental law, which is also coming to an end. I think we are at the end of the road for losing industrial production to China.
22:57 February 27, 2011 by volvoman9
@Marc the Texan, You could be right on this one because the child quota imposed on the populace some time ago has effectively crippled the labor pool. As the working males age there will be few to take their place. Presumably this is an easy fix but won't be realized for 18 to 20 years.

The real issue for me is that the western world has already priced itself out of the labor market and now a move is afoot to lower the standard of living in western industrialized nations and somehow restore their manufacturing might. This is also born out by the cries in the US to abolish or at least gut the EPA so as to remove restrictions on industry pollution and environmental damage. So as China becomes more like us we will be going the opposite way. Scary times in which we live.
14:58 March 1, 2011 by Taxlady
I was planning on one in the next 18 months but not now.
02:20 March 2, 2011 by volvoman9
@ Taxlady, You should be fine buying one for the next few years. Check out the ones built in Sweden or Belgium. It will take a few years to get a Chinese one into the rest of the world market. These last few could be valuable.
14:39 March 7, 2011 by bitko
@ volvoman9

"The western world has priced itself out of the labor market."

You speak just like a Bilderberg, right out of Switzerland. Or perhaps you champion all Wall Street causes, bankrupting the nearly ended United States, causing the U.S. congress to betray the U.S. citizenry for generations?

More like western world governments (the individual taxpayer in the now broke U.S.) has subsidized the global plutocratic corporatocracy so much so what can Ford do? Send Volvo to China? Remember, Swedish and EU citizens, it took a corrupt U.S. type C corporation, Ford, that has lived on U.S. government handouts for decades, to ruin a great auto maker, then give it to China for a song.

Okay, so, explain to all of us that care about Scandinavia, particularly Sweden, why in the heck BMW, VW, and many of the traditional medium and heavy industries in Germany are doing so well? BMW and Mercedes are throwing those luxury, 8 and 12 cylinder engine equipped autos everywhere, including China? Germany heavily, heavily, heavily regulates and taxes these companies, and they are not leaving Germany while making massive profits.

Also,l don't forget, by PR China's law, anything built in China must include all patent info, so China can copy it and kill the original creator. China's steel is crap, yet now they have the patents that make Swedish steel (not just in my Volvo 240) as well as all unique Swedish metallurgy.

It will be slow, but you'll see Volvo go, someday, soon.

Why did the Sweden feds save Saab and not Volvo? Of the two auto makers, which has employed more folks in Sweden and globally? Which has paid more taxes so y'alll can enjoy why Sweden, like Canada, is the World's envy as we want to live there. Well, some of us do.

Meanwhile, I'll stay with my three Volvo 240s.
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