Volvo to announce plans for China production base next spring

Shanghai December 28 (Gasgoo.com) Zhejiang Geely Holding Group Co., which completed its acquisition of Volvo Cars from Ford Motor Co. in August, will announce for the first time plans for Volvo production base in China before next spring, First Financial Daily reported Tuesday, citing Shen Hui, Volvo's senior vice president responsible for operations in China.

Shen Hui made the above remarks during an appearance at the just concluded Guangzhou Auto Show.

Geely and Volvo Cars are currently seeking Chinese government approval for multiple sites, including Shanghai, Chengdu and Daqing, to locate Volvo vehicle and component assembly facilities, Shen said, adding that the Board of directors will take into account of factors such as logistics, suppliers, labor costs, the surrounding market, etc. to select the best city for Volvo manufacturing base.

However, the embarrassing truth about the Swedish brand is that it is lagging behind luxury brands like Mercedes-Benz, BMW and Audi in the world's largest auto market, and thus, Volvo will not only need to bolster its traditional markets in Europe, but will have to significantly expand its business in the emerging markets, mainly in the Chinese market, Shen said.

Aiming to make China its second largest market, Volvo intends to boost annual capacity to 300,000 vehicles by 2015, with sales reaching 200,000 units, and meanwhile taking 20% of the country's luxury car market.

Volvo sold 22,000 vehicles in China last year and expects to sell 30,000 units this year, which means it has to quintuple its sales in five years to attain that ambitious goal.