We knew it was coming and now the day has come for a Chinese-owned company to start making cars in big numbers at a new plant in North America – the United States, to be precise.
To be more precise, the Chinese-owned company is the same one that makes Geely-brand cars in Sweden and China and which also owns Volvo Car. The new Volvo plant will be in South Carolina and is slated to begin pushing finished Volvos off the line in 2018. The plant will have an initial capacity to produce 100,000 vehicles a year.
This is a big deal for Volvo and a big deal for the Chinese auto industry. Never before has a Chinese-owned car company set up a high-volume plant to produce thousands of cars in North America.
As for Volvo, this long-moribund Swedish brand has grand plans to grow and prosper. It's been a long, long time coming, after years of painstaking work rebuilding the wreck Geely purchased from Ford Motor in the summer of 2010 for $1.5 billion (U.S.). As one Volvo insider told me, "the cupboard was bare. Ford didn't fund the product pipeline for years, which means it's taken five years to fix things."
These days Volvo officials are talking up growth and expansion. The company says the U.S. factory "forms part of an ambitious medium-term expansion plan to double global sales, boost market share and lift profitability"
By the time the U.S. factory goes on line, Volvo will have more than doubled its manufacturing capacity with new facilities in China, the U.S. and according to Just Auto, likely India.
As Volvo Car CEO Håkan Samuelsson said in a statement, "This new global industrial footprint and a complete product renewal form the foundation for our growth and profitability targets."
Volvo certainly needs help in Canada. Sales so far are down 6.5 per cent through the first quarter. At this rate, Volvo will have trouble selling 4,000 cars to Canadians in all of 2015. By contrast, BMW and Mercedes-Benz will each sell nearly 10 times that. Long-suffering Volvo dealers and brand loyalists have been starved for compelling new products for too many years. Their patience is about to be rewarded.
The lead model in Volvo's product revival is the new XC90 which rides on the SPA architecture for larger models – S60/XC60-sized and above, notes Just Auto. A second CMA architecture will be for smaller cars and SUVs. Volvo is quickly phasing out any leftover powertrains from its Ford days and earlier, too. The new Drive-E powertrains have been developed in-house.
The key to Volvo's future is a conscious move entirely up-market into premium territory. Replacements for the S80, V70 and XC70 are on the way. Look for the all-new S90, V90 and V90 Cross Country in 2016, we're told.
New versions of the V40, V40 Cross Country, S60, S60 Cross Country and XC60 are all due by 2017 or thereabouts, say various reports. The future S40, says, Just Auto, is a sedan to compete with the likes of Audi's A3 and Mercedes' CLA. Volvo Canada is likely to sell most or all of these in its lineup within three years.
If the Volvo plans works, the dominant German premium brands in Canada – Audi, BMW and Mercedes-Benz – will face a new challenge from a once-dozy European brand they've not had to worry about for more than a decade.
Premium buyers looking for something completely different from a European upscale brand can expect Volvo Canada to chase them aggressively.
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