Volvo Cars to build U.S. plant to spearhead sales recovery

Mon Mar 30, 2015 12:02am EDT
 
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By Laurence Frost

PARIS (Reuters) - Volvo Cars will invest $500 million in its first U.S. assembly plant under plans announced on Monday, plugging a longstanding gap in the Swedish carmaker's manufacturing base as it pursues a global comeback under Chinese ownership.

Volvo is in advanced talks with several U.S. states and will announce a location within weeks, Chief Executive Hakan Samuelsson said in embargoed comments made before the announcement. Production will begin in 2018.

Following its sale to Zhejiang Geely [GEELY.UL] by Ford (F.N: Quote) in 2010, Volvo 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 Reuters.

The plant will serve export markets as well as the United States, where Volvo is aiming for a return to annual sales of 100,000 vehicles. Reuters reported in January that a factory investment was being considered.

While the carmaker's global deliveries rose 9 percent last year to almost 466,000, largely thanks to China, U.S. sales fell another 8 percent to 56,000 vehicles.

The choice of the United States over Mexico - where rivals such as BMW (BMWG.DE: Quote) have announced a series of plant investments - underlines Volvo's determination to "rebuild the brand" among American consumers, the CEO said. "We want to give a clear signal that the U.S. is a home market for us."

He declined to identify the shortlisted sites but said the decision would reflect the availability and cost of skilled workers and logistics including the export of finished cars.   Continued...

 
A Volvo logo is seen on a car at the Brussels International Auto Show January 22, 2015.  REUTERS/Yves Herman