Volvo Cars plans as many as three Chinese plants, Jacoby says

Volvo Cars, the Swedish carmaker owned by China’s Zhejiang Geely Holding Group Co., may build vehicles at as many as three plants in the country, Chief Executive Officer Stefan Jacoby said.

Volvo is committed to increasing production in China, and its board will decide on sites once it receives approvals from the country’s regulators, Jacoby said in an interview today at an automotive conference in Stockholm.

“It depends on how strong we’re selling in the future” in China, Jacoby said. The southwestern city of Chengdu, a production hub for carmaker Geely Automobile Holdings Ltd., is a possible location, he said.

Zhejiang Geely bought Gothenburg-based Volvo from Ford Motor Co. in August for about $1.5 billion. Expanding in China is key to Volvo’s goal of doubling sales to 800,000 cars in 10 years. Volvo, which is working to develop its dealer network, hasn’t decided yet on how and when to expand production capacity in China, Jacoby said.

Volvo now builds the S40 and S80L cars for the Chinese market at a factory co-owned by Ford and Chongqing Changan Automobile Co. Volvo will be able to use the plant for another couple years, the Swedish company’s officials have said.

Jacoby arrived in Sweden today from the U.S., where he got “the first insight on the U.S. market from the Volvo perspective,” the executive said. Jacoby joined Volvo in August after running the U.S. operations of Wolfsburg, Germany-based Volkswagen AG, Europe’s biggest carmaker.

U.S. Deliveries

The Volkswagen brand’s U.S. sales fell 4.3 percent last year to 213,454 vehicles, slower than the 21 percent industrywide contraction in the country. Volvo’s U.S. deliveries dropped 16 percent to 61,435 vehicles.

“Fact is, we are losing market share and volume in the United States” at Volvo, Jacoby said. “This is something we need to change, and this is something we will change.”

Volvo should be able to sell 100,000 cars in the U.S. in two to three years, he said in a speech at the auto conference, reiterating a target he spelled out last month.

“I can’t tell you anything about the strategy because we don’t have the puzzle pieces together,” Jacoby said in the interview.

Volvo’s ability to expand sales will depend on employees “working hard” and having the right attitude, Jacoby told conference delegates. The company’s deliveries have hovered at about 400,000 cars for years, and “there seems to be some kind of mental barrier to expand beyond this,” Jacoby said. “I see absolutely no reason why we can’t sell 800,000 Volvos in 10 years, in 2020, if we do things right.”