Volvo Has A Plan
Today was the big day when Geely-bought Volvo wanted to announce its plans for the future. They did not disappoint.
First, they need a new plant in China. Former VWoA and now Volvo CEO Stefan Jacoby, who wants to sell about 200,000 cars in China by 2015, said: “We regard the Chinese market as the second home market for Volvo Car Corporation and a very important part of the plan to build a successful future for the company.”
Several cities had been vying for the Volvo plant. The Jiading District of Shanghai and the city of Daqing in the northeastern province of Heilongjiang were seen as top contenders. They had helped with the financing of the deal.
Jiading will get Volvo’s Chinese headquarters and design center. Daqing will get nothing for the time being.
Volvo will “build a new plant in the southwestern city of Chengdu with capacity to produce 100,000 cars a year,” reports the Financial Times.. As far as Daqing is concerned, Volvo will “continue investigations” for a plant there.
Going to Chengdu will please the Chinese central government. It plays right into their “go west” policy. There are a lot of inducements for big companies that move their plants into the wild and open west, away from the heavily populated eastern seashore.
It is important for Geely owned Volvo top establish good relationships with the government. The Chinese government is the biggest buyer of cars in the country. The announced policy that 50 percent of the government cars should be Chinese has been largely ignored. Volvo is Chinese now.
And of course, Volvo is looking to export the cars. With the Volvo brand Geely is the first Chinese company that has a real chance to be a player on the world market.
“It is obvious that at some point manufacturers will export from China,” Jacoby told Bloomberg. “We, as a global premium brand with European heritage, have a very good opportunity to be owned by a Chinese enterprise and to utilize our manufacturing capacities here.”
Volvo Cars plans to invest as much as $11 billion worldwide over the next five years to successfully sell its cars to China and the world. In 10 years, Volvo wants to sell 800,000 cars. Not an unrealistic target.
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