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CHINA

Geely reveals Volvo China production plans

Chinese car maker Geely plans to begin production in China of Volvo S60 cars and XC90 SUVs once it completes the purchase of the Swedish brand from US auto giant Ford.

Geely reveals Volvo China production plans

Daniel Dai, vice president of Geely Automobile revealed the firm’s plans in a discussion with Swedish business website placera.nu at Geely’s production plant in Ningbo, south of Shanghai.

“By assembling in China we can bring down the cost of the Volvo models,” he said, indicating that further models could soon follow.

Geely had previously made known its intention to examine the option of widespread Volvo production in China.

“Our low cost position will benefit Volvo while it will continue to be a premium brand,” said Daniel Dai.

Zhejiang Geely Holding signed a deal at the end of March to buy Volvo Cars from Ford. The US car maker agreed to sell its Volvo unit for $1.8 billion, less than a third of the $6.4 billion Ford paid for Volvo Cars in 1999.

Daniel Dai expects the final paperwork to be signed in four to five months.

Volvo Cars already has a production facility in China, where it has linked up with local firm Chang’an Automoble to make S40 cars and a version of the S80 sedan.

Volvo has 22,000 employees worldwide, including 16,000 in Sweden.

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VOLVO

Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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