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Geely to build large Volvo factory in China

TT/The Local · 20 Aug 2010, 16:12

Published: 20 Aug 2010 16:12 GMT+02:00

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However, according to Geely and Volvo, the announcement is premature and a decision has not yet been made.

"First, Volvo management will say what it wants and then it is up to the board," said Ning Shuyong, who has been a spokesperson for Volvo at Geely since July 1st. "There is still no decision on whether plant will be located in Jiading."

Ning is also the assistant of Li Shufu, the chairman of Volvo Car and Geely.

"I cannot say anything about the timetable before the factory is established," Ning told news agency TT.

He also did not confirm details of how large a future Volvo factory in China would be or what models would be manufactured there. Volvo emphasised that nothing is clear.

"The decision will be made here and by the board," said Volvo's information director Olle Axelson. "It will probably be in the autumn."

Volvo's new CEO Stefan Jacoby, who started in his new position on Monday, needs more time to determine the best location for a Chinese establishment, according to Axelson.

"He does not shoot from the hip and will not decide such a thing so quickly," said Axelson. "We are not ready to look at all parameters. Jiading is a good option, but it is a complex issue."

According to reports in China's state-run People's Daily and Oriental Morning Post, the factory will cover 800,000 square metres and essentially build the C30 and V70 series of vehicles.

Story continues below…

Construction is expected to be completed in the second half of 2012. The capacity at the new factory in Jiading is slightly larger than Volvo's "home factory" in Torslanda outside of Gothenburg in western Sweden.

In the last two years, Volvo has already built 300,000 cars in China, according to reports. The news about the construction of the new plant in China comes only two weeks after Ford's settlement with Geely was totally approved.

Previous reports on Volvo's plans in China had said that it would sell 150,000 cars a year by 2015, half the capacity of what the new plant is capable. Volvo sold 15,497 cars in the country in the first half of this year, up 88 percent from the same period in 2009.

TT/The Local (news@thelocal.se)

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Your comments about this article

19:06 August 20, 2010 by wenddiver
Oh, Boy!!!!! Chinese garbage at Swedish prices. That should be profitable. You might want to point out that you couldn't give the little Japanese made SAABs away in the US, because we wanted our Swedish made cars, made in Sweden.

We are troublesome that way.
20:27 August 20, 2010 by mikmak
Why would Volvo worry about a minority market like the US when they can sell on the much larger Chinese market?
20:55 August 20, 2010 by Anmiga
Mikmak, what are you talking about??? I would like to know your definition of minority market?

Volvo Cars sales during 2009 (2008) by market:

1. United States 61,426 (73,078)

2. Sweden 41,826 (47,775)

3. United Kingdom 34,371 (33,341)

4. Germany 25,221 (27,053)

5. China 22,405 (12,640)

6. Italy 15,896 (16,653)

7. Netherlands 14,035 (16,742)

8. Belgium 13,223 (12,872)

9. France 11,596 (11,745)

10. Spain 8,306 (9,876)

Others: 86,503 (112,522)

Source: http://www.volvocars.com/intl/top/about/corporate/volvo-sustainability/reports/Documents/Volvo_PV_Foretagsrapport_09_10_ENG.pdf
04:29 August 21, 2010 by Thebinary1
You do know that the Germans will be the real winners at the end ;)

I mean all current Volvo and SAAB owners will defect to VWs, Audis, BMWs, Opels, and Mercs.
06:29 August 21, 2010 by wenddiver
@milemak-The US economy is three times bigger than China. The disparity in workers wages is gigantic. Recently Skilled Chinese auto worker settled their strike for an increase to $225 a month, a garbage man in New York earns over$75,000 a tear. The US worker keeps his wages mostly under capitalism, the Chinese worker gives most of his to a Communist government.

Guess who is in a better position to buy a car. China is a race to the bottom .
09:51 August 21, 2010 by Nemesis
@ Wenddiver,

China just became tthe second biggest economy in the world, pushing Japan into third place. Not so long ago China became the worlds biggest exporter, putting Germany into second place.

Witin 10 to 14 years depending on which estimate you follow, China's economy will surpass that of the USA. The most pessimistic forecast for that recently is only 16 years. The recent surpasssing of Japan has made a lot of people sit up and take notice instead of recycling old out of date figures.

There is a very rapidly growing number of Chinese who are becoming rich and have a lot of disposable income. China is no longer the backward third world country it was 30 years ago. China is a growing economic power.

China has lifted more people out of poverty in the last decade than every other country on the planet combined. Compare that with the USA which has created more poverty.

Growth in sales of European cars in China is in double figures every year. The high end car market is definately starting to bloom, as you would notice if you ever visit China. There is now a lot of lambourgini's and ferrari's. You will also notice Humvee's, BMW's, SAAB's and Volvo's.

Only 20 years ago in Ireland, most of us would have happily settled for about $600 £400 €500, per month. Now anyone offering less than €2000 would be told what to go do with themselves. In Ireland 20 years ago I remember the same commentators that now claim China will take decades to catch up, claiming that Ireland will have a low wage economy for at least 50 years. They were proven wrong in five years and will be again.
10:36 August 21, 2010 by wenddiver
@Nemis-OK, let explain this to you, China is growing relative to other nations very rapidly. Why, because they were at the bottom end of the world economy.

Two years ago I only owned 4 personal cars, last year I bought three more without selling the first four. Had I bought one more car I WOULD HAVE DOUBLED THE NUMBER OF CARS I OWNED. WOW.

Now there is a certain American named Donald Trump, he probably also bought a few Autos, but I bet he didn't double the number he bought.

So using that logic I'm doing a lotbetter than the Donald!! But hold on, if I continue to double the number of cars I buy it eats up a bigger and bigger part of my personal wealth and that isn't available for investment.

So if Donald continues to buy at even 2% he will probably stay way ahead of me, without effecting his original personal wealth.

Wihat about China??? Are Chinese companies pumping out large bundles of money in investor dividends??? Are they creating personal wealth? Relative to a few years ago, yes. In comparison to the US, hardly.

As to the US creating poverty for their people, this is the most succesful business model in history. I KNOW OF NO ETHNIC GROUP IN THE WORLD THAT HAS COME TO AMERICA THAT IS NOT MORE SUCESSFUL THAN THE PEOPLE THEY LEFT BEHIND IN THE OLD COUNTRY. Do people fail in the US? YES, there are a lot of people, who are full of bad ideas, bad work ethics, etc. But the US system is more forgiving and easier to set up the new business and try again than any place in the world. That's why BMW and Mercedes, Hyundia, Toyota and Nissan have all increased the numbers of factories here.
14:01 August 21, 2010 by steve_38

The simple truth is that China in effect owns the US national debt.

The US like a few economies has been spedning more than it earns for a very long time.

If China sold the dollars it physically has now the US would be bust.

In just a few short years China economy will dwarf the US, the only thing stopping it at the minute is that its own internal market is not growing fast enough when it does the rest of the world will have a problem.

The real problem is as the Chinese economy grows and inflation in China ramps up us in the west will have to pay a lot more for the cheap(now) products we buy.

Your comments are way off the page.

The USA is a bankrupt nation and is in the toilet, one of its only saving graces is oil is sold in dollars:- its one of the reasons they invaded IRAQ as IRAQ had switched to buying in EURO. Other than G Bush is a m***n, same as Tony B LIAR

In a few years China may not need us as much as we need them !!!!!!!!!
15:06 August 21, 2010 by Rebel
In America, part of Volvo's appeal is that it is perceived as an inexpensive luxury car -- and much of that is based on the fact that it is made in Sweden. Whether Ford or Greely own it might not matter much as it still is seen as being made in Sweden by Swedish skilled workers. Make it in China and it will be just another Chinese car.

Oh, and maybe Bill Clinton and George Bush, and their like-minded NWO elitists in Europe, should come and explain to Swedish workers why making Volvo in China will benefit the working-class Swede in the future.
17:30 August 21, 2010 by volvoman9
These are all fascinating comments but I fear they are off the topic. The real question for Volvo's continued existence is whether the public will warm to a Chinese built Volvo. I just purchased a 2011 C 30. I would certainly not have taken a chance on a Chinese built one. @ binary1 is probably closest to the marque when they say that Volvo buyers will move to other premium brands.

I wrestled with this very issue when buying the new Volvo however Volvo offered incentives and options that the other brands did not.

The real issue for me will be whether or not Geely can make a success of Volvo as a world brand. This will determine it's survival. Ford could not; but for reasons of greed and a poor business model. No doubt there will be a lot of Volvos sold in China but with labor costs in Sweden it is doubtful they will be produced there. Sad; but simply business.
19:53 August 21, 2010 by Trebla
A few years ago we picked up our Volvo V70 from the factory in Gothenburg. A few days later I got around to looking at details- especially the plate on the body which clearly states this car was manufactured in ...Belgium.

90k miles ater it still seems well built- but I don't know how many Swedes were displaced by those pesky Belgians.
20:51 August 21, 2010 by LeoKinmann
In China Volvo is considered a luxurious brand. Geely is a fairly experienced player on the Chinese automobile market. They know the consumers don't think highly of Chinese cars cos they've been there. Whenever a foreign automobile manufacturer enters joint venture with a Chinese one, the cars retain their name and brand. The ones constructed in China are sold exclusively to domestic customers. On the European and American market, you can only find cars produced outside China. This has happened to VW, Citröen, Audi and many many other companies. Yet people still drive VW without the slight knowledge of China's role. If Geely has the slightest common sense they'll only sell locally produced Volvos in China, and leave the Swedish factories running as usual. In the end, the average Chinese customers can afford Volvos without paying the 100% tariff.
04:53 August 22, 2010 by Thebinary1
The problem is not because of a "Swedish Company having a manufacturing pant in China". The problem is because of a "Chinese Company having a manufacturing plant in China - USING a Swedish brand". If Chinese Corporate history has anything to teach, its that "sales always trump quality". The Chinese Company "won't care if its selling garbage .... as long it keeps selling!"

The brand will go nowhere but down! And the defectors will continue to skyrocket.
07:42 August 23, 2010 by flintis
Shortly in the news:- Volvo to say Bye Bye Trollhättan
12:08 August 23, 2010 by aaww

i am not gonna be surprised to see that title. production cost is way too high in Sweden, hardly can not understand you can really produce anything in this country except of using fully automation.

i guess the problem will be if Geely can keep a consistency on the quality of Volvo cars, no matter where that is produced. i am not scared about the quality of Chinese made products, giving a example on the iPhone, every single iPhone is made in China.
12:34 August 23, 2010 by Shaky
Volvo to say Bye Bye Trollhättan

Think you have the wrong car company there.
17:09 August 23, 2010 by Philip21
I understand that Jacoby has told the Volvo board that he has benchmarked Volvo cars and that they are "at best the same as Skoda products in the VW portfolio....."

What a way to win over your new team.

Just hope one of us gets a chance to ask him that question in a townhall meeting.....
17:58 August 23, 2010 by pisaier
Swedish mindset Volvo goes down anyway no matter who owns it, just a matter of time.
11:14 August 24, 2010 by flintis

u r the only one that noticed ;-))

Tho' Göteborg - Trollhättan not much difference they're both at the rear end of Sweden
18:35 August 25, 2010 by GefleFrequentFlyer
Oh I can't wait till the American euro-snobs think thier chinese built swedish everyman's car is something special, a hallmark of scanvinavian design, safety, construction and build quality.

Say goodbye the Ghent next!
00:21 August 27, 2010 by Da Goat
No wonder China is doing so well they are not burdened with the stupid banksters rules and greed like the rest of the world.

the rest of the world needs to look on quickly and default before they go down the gurglar (drain). The whole world has to go screw you we have had enough!

The chinese are the only ones who are clever enough to stick it to the rest of us! they are our slaves for the next year (or so) then they will own us (probably already do) from then on!

they have USA by the balls and have spent trillions of banksters capital to build whole cities (unoccupied and beautiful) so who is gonna invade china when they decide they are not gonna pay up! USA can't and Russia is a friend!

china has grown too big now, we just better remain friends
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