Zhejiang Geely Holding Group, the new owner of Volvo may – eventually – build as many as three plants in China to make the Swedish brand’s cars, a Geely spokesman has said.
If it goes ahead as expected, the plan would give Zhejiang Geely a combined capacity to make 300,000 Volvo cars in China per year, Ning Shuyong told Reuters. Possible locations are the Jiading district on the outskirts of Shanghai, the southwestern city of Chengdu, and the northeastern city of Daqing, said Ning, adding that the final plan still needed the approval of Volvo’s board and the Chinese government.
Go deeper with GlobalData
Li Shufu, chairman and founder of privately held Zhejiang Geely, separately told reporters in Hong Kong he is in no hurry regarding the final decision for Volvo’s China plants. “It takes time,” Li said when asked about the timetable for the plants. “It may take years.”
Volvo Cars booked revenue of US$12.4bn in 2009 by selling 334,000 cars but recorded a pre-tax loss of $653m.
Major new investment is a critical part of Li’s plan to turn Volvo around, including new manufacturing facilities in China that would nearly double the Swedish carmaker’s capacity to take advantage of China’s vast auto market, industry observers said.
“Our challenge is to get Volvo out of trouble,” Li said in an interview with the Wall Street Journal.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“From my perspective, Volvo’s product is already in very good demand and the company is profitable,” he told the newspaper. “Our real challenge is how we are going to evolve and develop the Volvo brand further.”
Manufacturing plants in Sweden and Belgium will be maintained, the company said last month.
Volvo sold just 24,000 cars in China in 2009, and Li said he knew he needed to boost the brand’s “sophistication” to match up with competitors Mercedes and BMW, perhaps by developing new luxury models.
If Volvo increases production in China, it could expand its presence in the lucrative government market. Beijing requires Chinese brands account for no less than 50% of government vehicles.
