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Volvo Pondering North American Manufacturing Plant: Report

2011 Volvo S40

2011 Volvo S40

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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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Comments (7)
  1. Volvo's are a great car, very safe and very innovative. I've owned two wagons in the past and I was very satisfied with each.
    I lease my vehicles and over the past few years Volvo's lease deals have been terrible. Very high cap.reduction along with high monthly payments for base vehicles.

  2. @Druffo4291, you can blame a weak dollar and paranoid lenders for that one. I expect that lease deals are better now than they were a few years back, but the weak dollar still means that foreign car prices are up (or, conversely, foreign manufacturers are making less money on the cars they sell here).

  3. Volvo a Swedish automaker that's owned by Communist China(yep the US does business with Communist China but not Communist Cuba :-) )who builds cars in Belgium,some cars in Sweden, that will soon build a plant here in the US just to make things even more interesting..haha.
    Can you imagine the logistics nightmare when it comes time to find a part when it fails!!. Someone has to be CRAZY to buy a Volvo just for the sake of making a statement.?!

  4. @Matt, the logistics are no worse than they are with BMW, Mercedes, Toyota or any other foreign automaker. Just like any other car, most parts are sourced from suppliers.

  5. I'd love to see how many parts for a BMW and or Mercedes come from China.

  6. @Matt, I can't give you an exact count, but the rough answer is "many." Even if Mercedes contracts with a German company to provide subassemblies, chances are good that company is buying components from China.

    Any car, even a Mercedes or BMW, is the sum of parts from the lowest bidder.

  7. Even my Bugatti Veyron 16.4!! ;-)

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