With new China plant, Volvo hopes to hit 2020 sales goal early: executive

Tue Jun 4, 2013 6:25am EDT
 
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By Norihiko Shirouzu

CHENGDU, China (Reuters) - Chinese-owned Swedish automaker Volvo Car Corp expects to be selling 200,000 cars a year in China by 2018, a senior executive said, two years ahead of its latest target and as a new assembly plant gears up for full production later this year.

The sales target is part of Volvo's plans announced two years ago following its acquisition by Zhejiang Geely Holding Group Co GEELY.UL - plans that see China's growing appetite for premium cars helping more than double Volvo's annual global sales to 800,000 cars by 2020 from 373,000 sold in 2010.

Volvo competes in China, its second-biggest market after the United States, against global luxury brands BMW (BMWG.DE: Quote), Jaguar (TAMO.NS: Quote) and Volkswagen AG's (VOWG_p.DE: Quote) Audi. Daimler has said it expects the premium auto market to grow at a "high single-digit or low double-digit rate" this year in China, where total vehicle sales rose 13.4 percent in April from last year, up from 10.7 percent growth in March.

While China's premium sector - generally considered as cars costing more than $50,000 - has grown faster than the industry average in recent years, the government is keen to stamp out over-the-top luxury, and many drivers are cautious not to look too flashy - which could play to Volvo's strengths in quality and solidity.

Fu Qiang, who took over Volvo's China sales and marketing operations last year, said on Tuesday the country's premium autos market should more than double to 3 million cars by 2020.

Fu said Volvo expects its China sales to grow by a fifth this year. "We have a lot of opportunities in China," he said at a company presentation in the southwestern city of Chengdu, where Volvo is due to open a new assembly plant. Though Volvo lags as a premium brand behind German brands, "nothing is impossible here (and) China changes too fast."

Fu said Volvo would continue to focus on safety, and on health issues - such as in-car air quality and cleaner exhaust emissions - at a time when drivers are more conscious about air pollution and the environment. "That's our advantage," he said.

Volvo originally said demand in China, the world's biggest auto market, would account for nearly half the additional volume it plans to generate around the world, but momentum fizzled last year as Volvo was forced to clean up management discipline at its independent dealer-operators.   Continued...

 
A man walks past a Volvo advertisement in Beijing March 21, 2013. REUTERS/Kim Kyung-Hoon