Volvo to build first US assembly plant

Updated: 2015-03-31 06:47

By PAUL WELITZKIN in New York(China Daily USA)

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Volvo announced on Monday that will invest up to $500 million in its first assembly plant in the United States, where the company plans to double sales.

Volvo, based in Gothenburg, Sweden, is owned by the Chinese company Zhejiang Geely Holding Group Co, in Hangzhou, Zhejiang province. Geely purchased Volvo from the Ford Motor Co in 2010. Volvo sold nearly 466,000 vehicles globally last year, but US sales fell about 8 percent to 56,371.

"We hope to announce a location within the next two months,'' Jim Nichols, technology and product communications manager for Volvo told China Daily in an e-mail.

Nichols said the company hopes to have the plant open by 2018. "We will build vehicles on our SPA platform, but it is too early to tell exactly what models will be produced in the US," he said. The SPA (Scalable Product Architecture) modular chassis system has been in development for several years and is expected to come to market in the 2016 XC90 crossover.

"The XC90 is an important vehicle for Volvo. It's their largest SUV and the US is the strongest market now for SUVs," Jessica Caldwell, a senior analyst at told China Daily.

Caldwell said the US plant will also help Volvo to make a statement in the world's second-largest market. "Volvo has said it wants to double US sales to 100,000 and this plant can become a part of their marketing here."

Stephanie Brinley, an analyst at IHS Automotive, said the US facility will enable the company to reassure certain US consumers. "The plant will allow them to appeal to US buyers that are concerned about the perception of Volvo being a Chinese owned company. It will also give them the capacity to produce and sell more vehicles," she told China Daily.

Earlier this year Volvo announced it would start exporting the S60 Inscription mid-sized sedan from China to the US becoming the first major global automaker to do that. The car made its US debut at the North American International Auto Show in Detroit in January. Volvo has operated an assembly plant in Chengdu, Sichuan province, since 2013, which is where the Inscription will be built.

While struggling in the US, Volvo's 2014 sales in China grew almost 33 percent to 81,221 cars. The company cited three new manufacturing plants, a growing dealership network and the continuous expansion of if its product line for the strong showing in the Chinese market.