Volvo Cars plans to open its first US plant

AP News
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Posted: Mar 30, 2015 5:11 PM

DETROIT (AP) — Volvo Cars is planning to build its first-ever U.S. assembly plant as part of a push to increase sales here.

The $500 million plant will be Volvo's first car plant in North America.

The Swedish automaker says it has a short list of possible locations but didn't reveal them Monday. The company is expected to announce the location in the next few months.

Volvo has been owned by Chinese automaker Geely Holding since 2010. It currently has two plants in Europe and two in China.

Volvo CEO Hakan Samuelsson said the decision to open a U.S. plant highlights Volvo's long-term commitment to the U.S. market.

"Volvo Cars cannot claim to be a true global car maker without an industrial presence in the U.S.," Samuelsson said in a statement.

Volvo has sold cars in the U.S. since 1955, but the brand struggled after its sale to Ford Motor Co. in 1999. Its products got old and couldn't compete with newer rivals from Audi and others. Geely bought Volvo from Ford for $1.8 billion, a fraction of the $6.4 billion Ford had paid to acquire it.

Now, Volvo is hoping new vehicles — including the upcoming XC90 SUV, which goes on sale this summer — and a bigger manufacturing footprint will help it double its U.S. sales to 100,000 over the next few years.

Sweden's Volvo Group — the former parent of Volvo Cars — already has a manufacturing presence in the U.S. It makes trucks at a plant in Dublin, Virginia, and engines in Hagerstown, Maryland. It also has a U.S. headquarters in North Carolina. But Volvo's car division was separated from that business when it was bought by Ford.

Mike Jackson, the head of North American vehicle forecasting for the consulting firm IHS Automotive, said automakers generally want to build cars in the places where they sell them as a hedge against currency fluctuations. Mercedes, BMW and Acura are among the other foreign luxury brands that build vehicles in the U.S.

Although Geely owns Volvo, Jackson doubts the plant will be used to build Geely-branded cars for the U.S. Safety and quality issues delayed Geely's planned entry into the U.S. market in the mid-2000s. More recently, Geely has struggled in China, where many customers prefer foreign brands.

"A Volvo plant would produce Volvo products," Jackson said.