Volvo Pondering North American Manufacturing Plant: Report

September 13, 2011

Just in case you’ve lost track, Volvo is the Swedish automaker, owned by the Chinese, who builds cars in Belgium. They also build cars in Sweden, of course, and they’ll soon open a plant in China. In fact, business in China is so good for Volvo (and parent company, Geely), that the automaker will likely green-light construction of a second Chinese factory by the end of the year.

That solves one problem, but it doesn’t solve another: an unfavorable exchange rate against the U.S. dollar, which raises the cost of selling Volvo automobiles here. The best solution? Build a plant in North America to balance what Volvo CEO Stefan Jacoby calls “currency movements.” While nothing has been decided yet, Jacoby calls a North American manufacturing operation “the utmost solution,” and the automaker is even willing to enter into a joint venture with the right partner.

Ford, who sold Volvo to Zhejiang Geely in 2010, has been looking for a new partner at their Flat Rock, Michigan plant since Mazda announced its departure. It’s far too early to say if such a cooperative and mutually beneficial relationship is even under consideration, but we’ll say this: necessity makes for some strange bedfellows in the automotive world.

Despite the recent global downturn in the automotive business, Volvo remains cautiously optimistic about the future. Jacoby admits that the automaker is “more prepared” than they were in 2008, in regards to both financial strength and manufacturing flexibility. By 2020, the automaker hopes to boost sales to 800,000 units annually, or roughly double its current sales. To achieve this goal, Volvo is planning to invest some $11 billion over the next five years to grow demand in worldwide markets.

[Automotive News (subscription required)]

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