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CHINA

Volvo mulls Chinese plant within two years

Volvo Cars CEO Stefan Jacoby has confirmed that the firm plans to open a new assembly plant in China in two years.

Volvo mulls Chinese plant within two years

“We are soon going to make a decision on the first plant,” Stefan Jacoby

told the financial newspaper Dagens Industri on Monday.

“Production will begin in two years. We are waiting for approval from the authorities.”

Chinese automaker Geely, which acquired the Swedish car maker from US giant Ford in August, said in September it planned to increase Volvo sales to 300,000 cars a year in China alone.

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

Volvo said an agreement on the company’s “strategic direction” in China had been reached on December 9th, with details on its application to be worked out at a meeting of the executive board.

Jacoby said the goal is to quickly expand annual sales in China to 100,000 vehicles from the current level of 30,000.

Volvo already builds its S40 and S80 models in China through a partnership between former owner Ford and Chinese group Chang’an.

Volvo employed 19,650 people in 2009, down from nearly 28,000 five years earlier, and Jacoby said the company planned to re-hire 500 workers in Sweden

next year thanks to a rebound in sales.

Sales had fallen from a peak of 460,000 vehicles in 2007 to around 330,000 in 2009 before rising to 380,000 this year.

Geely, which paid $1.5 billion for Volvo, hopes to double production over the next 10 years, mainly for the Chinese market.

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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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