The first plant in North America by Volvo, a company owned by a Chinese automotive group, will begin producing the next generation of S60 mid-size sedans in 2018, according to Volvo CEO Håkan Samuelsson.
Samuelsson, speaking to reporters in America's car capital Detroit on the eve of the industry opening of the International Auto Show, stressed that the plant would have international ambition.
“This is not a factory for local production,” Samuelsson said. “It will of course produce for the US, but around a half of the production will be exported.”
This despite the fact that Volvo already has plants in China and Sweden.
Samuelsson said that the decision on the plant's scope was made in 2014, long before US car manufacturing and the repatriation of jobs from Mexico became a hot political topic pushed by President-elect Donald Trump.
The CEO said it made sense to build the plant, which will have the capacity of producing 100,000 cars a year, in the United States.
“You sit down and calculate all your financials, people cost per hour, transport cost, we looked into, of course Mexico, we looked into the US, somewhere in the South. At the end, there was no big difference financially,” he said.
“Mexico is very attractive, everybody else is going to Mexico, but the factor for us, financially it's a wash, but we need two things: the US is the biggest market, Mexico isn't, and we need to come closer to our customers, we have to understand them if we want to grow, and it's a sign of commitment to our retailers.”
Volvo sold a record 534,000 cars last year, of which 83,000 were in the US market.
Trump, who will succeed Barack Obama on January 20th as the next US president, has targeted several car makers who have invested in Mexico plants. He has also criticized the North American Free Trade Agreement, which he has blamed for the loss of American manufacturing jobs.
In retrospect, “we are really happy and glad we took that decision” added Samuelsson.