Chinese-owned Volvo Cars will invest US$500 million to build its first assembly plant in the United States.
Volvo is in advanced talks with several US states and will announce a location within weeks, Reuters reported, citing a statement from chief executive Hakan Samuelsson. Production will begin in 2018.
The carmaker, bought by Zhejiang Geely Holding Group Co. in 2010, has stepped up investment in new models and production, adding a pair of Chinese factories to its two older European plants.
North American manufacturing is “the last piece in establishing our global footprint”, Samuelsson told the news agency.
The plant will serve export markets as well as the US, where Volvo is aiming for a return to annual sales of 100,000 vehicles.
Volvo’s deliveries rose 9 percent last year to almost 466,000, but most of the gains came from China, while US sales fell 8 percent to 56,000 units.
The choice of the United States over Mexico — where rivals such as BMW have announced a series of plant investments — underlines Volvo’s determination to “rebuild the brand” among American consumers, Samuelsson said. “We want to give a clear signal that the US is a home market for us.”
He declined to identify the sites that have been shortlisted, but said the decision would reflect the availability and cost of skilled workers and logistics including the export of finished cars.
Samuelsson said he was neutral on whether US staff are represented by the United Auto Workers union – a politically divisive issue that has dogged plant decisions by Volkswagen and others.
“It’s up to the people who work for us to choose how they want to be organized,” he said. “We have no opinion on that.”
Volvo said production capacity would be close to the 120,000 vehicles at its larger Chinese plant, with model plans still under wraps. The arrival of the new XC90 flagship SUV as an import is counted on to halt the US sales slide this year.
Volvo may find the going tougher than in its US heyday, which saw 2004 deliveries approach 140,000. Since then, BMW and its German rivals, VW’s Audi and Daimler’s Mercedes-Benz, have grabbed a bigger share of the luxury market, the news agency said.
Toyota’s Lexus brand is also gaining ground, and a product offensive by Ford’s Lincoln and General Motors’ Cadillac offers more non-German options to US premium buyers.
Volvo’s plant investment nonetheless demonstrates confidence that it can claw its way back under newly appointed Americas chief Lex Kerssemakers, the report said.
“We’re going after a market share of 1 percent with a clear identity that we know is very attractive to some customer groups,” Samuelsson said. “It is a tough market — but I wouldn’t say it’s tougher than Europe or China.”
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