By on September 13, 2011

The national character of auto brands is a tricky thing. For decades, Volvo wore its Swedishness on its sleeve, emphasizing the values that made Ikea, Abba and Swedish porn so popular in the US… even when it was an outpost of the Ford empire. And then the unthinkable happened: Chinese up-and-comer Li Shufu bought the brand and rolled it into his Geely empire. In the world of national-character-branding, being bought by a Chinese firm is something like hiring Casey Anthony as a brand ambassador, or using a mascot called “Mr Melamine Milk” (another nightmare scenario can be found here). So, how does a brand like Volvo, that was built on Swedishness, get past the “China Factor”? By doubling down on Swedishness? How about by building cars in the US?

Volvo’s Stephan Jacoby has opened the door to just that possibility, telling Bloomberg [via Automotive News [sub]]

One weakness of Volvo cars is the exposure to the U.S. dollar, so we are investigating increasing our sourcing in North America. The utmost solution would be to have a North American industrial footprint. We haven’t made up our mind.

OK, so currency exchange is the overriding business factor, but on a secondary level, building cars in the US would override any concerns American consumers might have about buying a made-in-China Volvo. For years now, the industry has fretted that the rise of Chinese automakers would be accompanied by waves of cheap, Chinese-built exports wiping out traditional brands on sheer cost alone. That Li and Jacoby are talking about building a US plant confirms that Chinese ascendancy need not follow the worst possible scenarios of industrial realpolitik. And as Sweden’s other automaker circles the drain, making Volvo a more global brand by assembling in Europe, China and the US is another triumph of reason over “automotive nationalism.”

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40 Comments on “Are You Ready For: An American Volvo?...”


  • avatar
    John Horner

    I’m not sure what the situation is presently, but for decades the US was Volvo’s single biggest market. It makes sense to build ‘em where you sell ‘em.

    As far as Swedishness goes: The vast majority of products in Ikea’s US stores are in fact made in China doesn’t seem to stop people from buying the stuff in massive quantities. Ikea slaps “designed in Sweden” all over the stuff, and most customers could care less.

    • 0 avatar
      mike978

      Generally it makes sense to build them in the country they are sold (especially for large markets like the US). However Volvo sales in the US are tiny with them being lucky if they break 60,000 units for the whole year and they have had a very extensive range which is now being pruned. A factory usually produces around 200,000 units, so would the majority be exported?

      As for IKEA, alot of their stuff is made in low cost countries, not just China. Poland, Vietnam etc.

      • 0 avatar
        Chicago Dude

        “As for IKEA, alot of their stuff is made in low cost countries, not just China. Poland, Vietnam etc.”

        IKEA has a large factory in Virginia… If you Google it, it appears as though they treat the employees like crap and pay them like crap too.

    • 0 avatar

      Also, I recall that Volvo’s issue was never that people didn’t LIKE their products, its simply that their products were always too expensive once they were optioned up. It seems to me that producing them in NA would solve that issue.

    • 0 avatar
      highdesertcat

      Many GIs stationed in Europe during the 70s and 80s brought back Swedish-made Volvos because of their Swedishness and the fact that they lasted forever. The business was so brisk because every American base had a Volvo-concession at the BX/PX. That changed.

      After Ford bought Volvo fewer people were inclined to buy them because the money-saving measures instituted by Ford negatively impacted the legendary Volvo quality and longevity. They just didn’t sell as well as they once had.

      If Volvo starts making them inside the US, they, too, will suffer from the same maladies that have affected every foreign auto maker who started making them in the US, using the same parts suppliers as the domestic car makers. Recalls, recalls, recalls, from gas pedals to airbags to rusting frames to bad welds and badly stitched seatbelts. Who needs that?

      • 0 avatar
        jadnhm

        I don’t think your story of sales post-Ford-purchase is exactly right. As far as I know, Ford purchased Volvo in 1998 and Volvo had their best sales ever in 2006 or 2007… according to this they had their biggest slice of the market in 2004
        http://wardsauto.com/keydata/historical/UsaSa28summary/

      • 0 avatar
        threeer

        True…for the longest time when we were stationed there, 240 and later 740/760s sprang up all over the place on post.

      • 0 avatar
        highdesertcat

        jdnhm, what you say is absolutely true! But the peak numbers do not reveal that buyers during the peak were NEW to Volvo and were garnered as a result of Ford’s massive marketing and advertising efforts to sell Ford-owned Volvo products. It worked, at least for a little while.

        Now the flip side of the coin; owners of the OLD pre-Ford Volvo cars wouldn’t touch the new Ford-Volvo because of all the cost-cutting changes that had been made and the resulting quality degradation. If the Ford-Volvo had been as reliable as the old Volvo there would not have been such an enormous loss of buyers.

        As history shows us, the sales of Ford-Volvo dwindled down over time as their reputation built. The downward spiral continued to where Volvo was not a cash-cow for Ford and eventually was sold, along with JLR. If they were making money for Ford, they would not have been sold. Can we agree on that?

        I know that some people stare themselves blind at facts and data that represent a snap-shot in time, but what leads up to, and comes after that snapshot in time, is equally important and often tells a much more intriguing story. That’s the problem with interpreting ‘facts’. They can often be misleading and result in unrealistic conclusions.

        Regardless, Volvo is now Chinese-owned. And if they were thinking of building them in North America for easier access to the US market would it not be better to open a plant in Mexico?

        threeer, my wife’s brother-in-law still has a 70’s vintage light-metallic blue Volvo 262, black leather, stick shift, with air, he brought back with him from Europe.

        It is in immaculate shape with over 300,000 miles on it. Except for Belts, Hoses, Tires, Plugs and the AC unit, everything is just the same as it was when he bought it – original. The 2006 Volvo they also owned was traded in 2009 for a US-made Highlander. Volvo lost another one. Things have changed!

      • 0 avatar
        jadnhm

        yessir I can agree to pretty much all of that.

        I personally kind of wish they would put an assembly plant in Atlantic Canada – our manufacturing industry is really dwindling these past 15 years or so. The economics might not work but I would still love to see it.

        While I agree with you that their quality control was down with Ford, I feel like they eventually started down the wrong road as well. The XC70 – their bread and butter – became far too big and far too expensive. The traditional ‘soccer mom’ buyer just lost interest – they want sturdy, reliable, functional. They just took it too far and now have a giant wagon that they have to brand as a small SUV to justify the cost. It’s no wonder people either opt for the XC90 or move on to another manufacturer (Subaru anyone?).

        They have joined the many makers saying “Americans don’t buy wagons” to which I would respond “because you’re building the wrong ones!”.

        Also, I agree that Ford would have kept them if they were making money. I think they started losing money because of many reasons related to Ford ownership, one of which was not enough support for new models (and then, when they did bring in new models I don’t think they were the right ones).

        BTW I’m one of those pre-Ford Volvo people. I think they could have a good business building the spartan functional and appropriately priced vehicles they did in the 80s and 90s but it’s hard to make a decent margin in that segment. These days it seems if you aren’t one of the biggest 5 or so manufacturers you have to go for luxury to make your margin, which is a shame.

  • avatar
    Hildy Johnson

    Jacoby, while at VW, was apparently also the one who convinced VW to set up shop in Chattanooga.

  • avatar
    djn

    Didn’t Volvo assemble in Canada for many years?

    • 0 avatar
      jadnhm

      yes there was an assembly plant in Halifax NS for many years. It closed in 1998. I think that’s the same year Ford bought Volvo but I’m not sure if it was before or after the sale that the closure was announced. Not sure it makes a difference.

      I grew up in that area and there were lots of people driving 240s and 740s with “Assembled In Halifax NS” stickers on the rear glass.

      • 0 avatar
        piffpaff

        the closure of halifax assembly was totally unrelated to ford’s acquisition of volvo cars in 1999. the halifax assembly was a ckd-factory (assembly of kits packed at the main plant in europe) and the reason for having this north american factory was more due to import duties than natural hedging.
        traditionally, volvo cars has always been at the mercy of the dollar-sek exchange rate; when the dollar was high the guys thought they were brilliant business men. when the dollar went the other way they started making plans for us assembly and then the dollar would go the other way before the plans were implemented…

  • avatar
    LordDetroitofLondon

    Maybe SAAB and Volvo should team up together(Solvo or VAAB, anyone?) for a JV ? They’re too small to survive on their own anyways, maybe even make Ikea one of their “partners?”

  • avatar
    FreedMike

    OK, by the same logic: if GM started building the CTS-V in Europe, would be any less quintessentially American?

    I’d say the car’s personality speaks louder than the sum of its parts, wherever they are sourced.

  • avatar
    Educator(of teachers)Dan

    Buy (made by) American and American’s work. Building them in this country would actually make me MORE likely to look at a Volvo, just as building Sonata’s in the U.S. had made me more likely to seriously consider one. Now I won’t buy something made in America “just because” but it does make me feel better to know that some of my money went to put food on that factory worker’s table.

    • 0 avatar
      threeer

      Sorry…still wouldn’t buy one, even if “Made in America” since parent company sits firmly in China.

      • 0 avatar
        LALoser

        +1 threeer. I have had a few new Volvos, and currently have an ’07 XC70 that has been flawless…so far. But when I trade at the end of the year, Volvo will not be given a thought. The parent company being in and part of a Communist country is something I can not back.

      • 0 avatar

        Really LALoser? They may be communist, but they are just as good at capitalism as anybody else. Better, in fact. If they can, using their Swedish design and engineering teams, build a product that I find compelling enough to buy, who cares what their political system is.

      • 0 avatar
        Sam P

        The Chinese are communist in name only. Their political system is one-party authoritarianism.

        Also, if you’re avoiding Chinese products, get ready to do without a modern computer or cellular phone.

      • 0 avatar
        LALoser

        Echild: Yes, they are Communist, and their brand of “Capitalism” is run from a central government. Geely had to get permission to buy Volvo. Add the fact the government is a stakeholder in private “Capitalist” companies to bring in cash to back despots and grow their military for such nice things as tighten control on Tibet and make an outrageous claim to the Spratlys…is not something I choose to back.
        SamP: OK, let’s call it a single party system. Let’s say they have freedom of speech, movement, association, and can abide by the Vatican Pope and let the Tibetians pick the Dali Lama….but is it true? Seems Communist to me. BTW: Yes, I have lived and worked there.
        I always try not to buy Communist items, some are unavoidable, but that does not stop me from doing my best.
        I choose to not sell out my ethics in the name of economics…silly I know. But they are my ethics.

      • 0 avatar
        ghentForever

        @threer Yeah you think you’re so high and mighty. But you look just like a BMW fanboy to me. Why don’t you just say that you won’t buy fwd cars?

        @laloser Economic decisions should not be distorted by political opinions. Should the Chinese stop buying cars from GM and instead buy only German or Japanese cars just because US blatantly spied on China with a manned spyplane and caused the death of one fighter pilot? Should China watch itself be broken up just because some Dalai went rogue? Tibet became a part of China under the Ching Dynasty. Without China, Tibet is now probably some high plateau tourist resort and a British Colony, instead of getting huge inflow of investments. You think America has a perfect system? Watch how the Republicans only care about their rich patrons and Democrats only know how to
        spend their way out of an economic recession. And don’t tell me you have lived and worked in China. Every Westerner who claims to understand China always says that.

        And I have no doubt America will claim the Spratlys as their own too if some uncolonized islands happen to be in the vicinity of the US coastline. Or even beyond US coastline. They already claimed Guam, didn’t they? :) No doubt you would claim Guam was liberated from Japan by the Americans. What about Puerto Rico? Isn’t it supposed to belong to Haiti? Or Western Samoa?

        And one more thing. Geely is a private company. When you buy a Volvo, you’re not buying from the Chinese government. You’re buying from Li Shufu, a hardworking and brilliant entrepreneur. But I thought you already knew that since you had lived and worked in China? :)

  • avatar
    Rod Panhard

    Toyotas and Nissans have gotten pretty darned American over the years, and they seem to be doing pretty darned well. Same goes for both Saab and Volvo. The difference is that cars have become fashion accessories. There’s only enough room in the jacuzzi for so many fashionistas though, and it seems as if the cycle of reoccuring fashion trends is longer for autos than it is for low-rise hip hugger jeans.

  • avatar
    SKUSA_boy

    It won’t be an American Volvo if it is built here. It will still be a Chinese Volvo to me. The same goes for if it continues to be built in Sweden, because it will still be a Chinese Volvo to me. Volvo is over and done with. At least that is my opinion.

  • avatar
    turbobrick

    They had an assembly plant in Halifax during the RWD brick years, my old 240 was made there. It would make perfect sense to move the XC90 production into the US where most of them are sold anyways and to get around the “chicken tax”. Build them in Minnesota or something, that’s almost as good as being in Sweden, ja?

    • 0 avatar
      acuraandy

      Nice Midwestern reference there, ya? Except two things:

      Look at Ford, they are closing St. Paul Assembly soon due to, as much as they won’t say, TAXES. We nearly just became the highest taxed state in the US, mind you (thanks to Governor Spineless ).

      Secondly, Volvo/Geely would lose a s***load of money making a plant in Minnesota due to said taxation.

      If they did, however, I would be first in line trying to get in.

      Market-wise, would make complete sense. Monetarily, who knows in this malaise…

      • 0 avatar
        highdesertcat

        Yes, taxes , but more importantly, labor costs, as all the domestic manufacturers have demonstrated by opening plants in Mexico.

        Good for Mexico, true, but that doesn’t create any jobs inside the US. Neither does building them in Canada. Unless our national economic policy changes, look for more production to move south of the border, aided and abetted by NAFTA.

        It would be smarter for Volvo to set up shop in Mexico and import under NAFTA. That would make a whole lot more sense than building them in the US. No doubt the UAW would want to get involved with this, as would the NLRB. No gain – all pain.

      • 0 avatar
        turbobrick

        So you go and squeeze tax concessions out of the Governor, talk to Ford about buying the plant for chump change and retool it. Or find some other state with a dead plant and sufficient amount of desperation.

      • 0 avatar
        MrWhopee

        Well, at least if Volvo is made in Minnesota, it will be built by Swedes!

  • avatar
    John Horner

    Perhaps one of the manufacturing sub-contracting companies should set up an automotive factory in the US to make cars under contract for various brands. Magna already has an Austrian factory which does such a thing, so why not a Magna USA assembly plant for hire?

    Alternatively, Mitsubishi has a nice modern factory in Illinois which probably has excess capacity. Volvo used to work closely with Mitsubishi in the pre-Ford days. So, why not team up to build some US market Volvos there?

  • avatar
    detlump

    Volvo has built cars in Belgium for a while, does that make them less Swedish?

    I think it is a good idea, at least for the short term. Many Americans may not want a Chinese built Volvo but since MB, BMW, VW build cars here, it is OK. I would love to work at the plant! I have three pre-Ford Volvos and they have been solid cars.

    I think if Volvo can build cars here Americans want – roomy, comfortable, dependable with some character (everyone has safety as has been said) they could clear 100K units.

    Maybe they could buy the tooling for the Flex and call it the V90. It’s a Volvo underneath after all.

  • avatar
    threeer

    @ghent

    “high and mighty…fanboy?” I’ll attempt to respond without sinking to the level of being rude. Having said that, years and years ago (before wife and kid), I did own a BMW. I grew up in Germany, so I was surrounded by them. At least the Germans aren’t actively pursueing ways to blow our aircraft carriers out of the water while alternatly scaring their neighbors…nor are they virtually assuring that we can’t compete with their labor and purchase price due to a seriously manipulated currency. But I digress…
    We all make choices in what we buy and support. I’ll freely concede that America has given up the manufacturing lead on many “every day” items, which for me is very sad and painful. I do make every effort to look at the country of origin when I buy a new product, and do my best to not continue the support of a country that is much less than friendly to this nation. Sorry…we all have our own moral and ethical codes that we follow, and it has little to do with being “high and mighty.” Others are free (one of the thankfully Constitutionally provided rights we have here) to chose to buy whatever they want, from whatever country produced it. I just try to make sure it isn’t Chinese. YYMV…

    • 0 avatar

      Gentlemen, please observe the rules of civility – or, you know, else …

      Some thoughts:

      Carriers: If Italy, Spain, India and world powers such as Brazil or Thailand are allowed to play with an aircraft carrier, then the world’s second largest economy should not be denied the joy and considerable expense of playing with its own second-hand toy. Experts doubt that the thing (with a ramp, for crying out loud) will see much service before 2020 anyway, also because China is still fiddling with planes suitable for carriers.

      Scaring neighbors: China is not scaring neighbors. However, it is very territorial of its own sovereign territory – as anyone who had lived in China should know. China takes a dim view of attempts to split off Tibet, which, as previously remarked, they owned before the U.S. had come into existence. China loves the Himalaya as a much better Chinese Wall and has no plans to cross it. When was the last time China invaded another country … as opposed to, you know …

      Spratlys: They are claimed by China, Taiwan, Malaysia, the Philippines, Vietnam, and Brunei. Take a number.

      Cars: Anybody may buy any car he or she wants, even in China. Car choices based on political factors went out of fashion ever since the wall in Europe came down.

      • 0 avatar
        threeer

        And here I thought I was being civil. I applaud your efforts to attempt to keep discussions above board here, which is why I’ve enjoyed stopping by to spend some of my quality time on TTAC. Name-calling has no place here and I hope that policy continues.

        I’ll slightly disagree with you (most humbly) regarding the factors behind a car purchase. Call it what you want; political, moral, ethical, economical…but some folks still do attempt to make a decided effort to support certain countries (and vice, not support others).

        Thanks for keeping us clean.

  • avatar
    Forty2

    jadnhm: Volvo had a plant in Halifax from 1963-1998.

    http://en.wikipedia.org/wiki/Volvo_Halifax_Assembly

    • 0 avatar
      jadnhm

      I know! I noted this in another post. I actually grew up about an hour away from Halifax.

      See, it’s a great idea! It worked for 35 years, seems like it might be worth a shot!

  • avatar
    gt40fan

    It’s my opinion that where the owner of a company is based out of or where a product is produced has little impact on sales success of that product (from the buyers’ perception standpoint). Product design/quality, pricing, brand-image (marketing) is all far more influential.
    Volvo is having good success in NA with their new S60 and XC60 while being owned 100 percent by Chinese.
    I think this makes good conversation amongst the relatively small group of people that read and contribute to places like this but not to the masses that are shopping for cars. Same goes for pretty much every other product.
    Case-in-point, an article was posted here about the new Maseratti SUV where the writer was supporting a case for its success. It will be built in Detroit and based off a Jeep Grand Cherokee platform and potentially using a fair amount from the Chrysler parts bin. Still, it is projected as being a successful seller.


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