Volvo as pioneer: new plant in china to serve global markets

Volvo as pioneer: new plant in china to serve global markets

The production plant in chengdu in southwest china is the swedish carmaker’s first factory in upper europe. Production is scheduled to start by the end of the year, volvo boss hÃ¥kan samuelsson said on wednesday at the presentation of the new site.

The focus is initially on the world’s largest automotive market in china, but in the long term volvo also wants to supply asia, the united states and europe from the middle kingdom.

After suffering an eleven percent slump in china in 2012, volvo sales rose by 27 percent from january to may compared to the same period the previous year. "We see good progress," says samuelsson.

With the new plant in chengdu and new models, the carmaker, which has been owned by the chinese geely group since 2010, wants to regain market share. Geely CEO li shufu pledged support: the majority stake in volvo was a strategic investment and not a short-term one.

The size of the investment in the plant in chengdu, which will initially be borne by geely and then transferred to a joint venture, was not disclosed. It has a capacity of 120,000 cars per year, with an initial production of 30,000 planned for 2014.

The first model to roll off the production line will be a long version of the S60 model for the chinese market. According to reports, an XC landing vehicle will be added next year. Production plant to "turn the tide in china," said factory manager lars danielson. Another factory is planned in the oil city of daqing in northeast china.

Sales in china to increase fivefold to 200,000 cars by 2020. Worldwide, the target of 800,000 cars remains valid. "Whether it happens a year earlier or later is not important," samuelsson said.

"We are on the right track," he said, referring to the plant and the new products. With the lower costs, china should "serve as a basis for asian markets," she says. The factory will be integrated into the "global production structure.

"We will export from china in the future? But sure," said strategy chief lex kerssemakers. While other international manufacturers don’t export from china because they don’t want to share profits with their chinese joint venture partners, volvo doesn’t have that problem because it’s owned by geely, he said.

Geely chief li shufu pledged further efforts "to restore volvo to glory". The loyalty to his company is "volvo’s strongest". Both companies joined forces because geely is active in the lower market segment and volvo in the premium segment.

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