Volvo to expand offering in China

Financial Times (Beijing) -  Volvo Cars will launch 10 models in China over the next five years as it seeks to make up for lost time in the world's largest car market, its chief executive said.

The Swedish carmaker, which is owned by Chinese carmaker Geely, today offers six models in China and will add the new ones after opening two car plants and an engine plant in the country.

"In the year 2017 we will offer 10 additional new models in the Chinese market," Stefan Jacoby, Volvo chief executive, said at the Beijing auto show.

Because some of the cars in Volvo's line-up would be retired by then, the number of models offered would be less than 16, he said. The new models would mostly come from the brand's global cars portfolio, but some would be tailored for the Chinese market, Volvo said.

The comments confirmed remarks made by Li Shufu, chairman of Geely and Volvo, at the weekend.

Despite its Chinese owners, Volvo trails behind most of its competitors in a market now viewed by the industry as indispensable.

The Swedish brand produces its S80L long wheelbase saloon car in China in a joint venture with local producer Chang'an and Ford Motor, its former owner.

Volvo now aims to open its first car plant in the second half of 2013 in the interior city of Chengdu, which will make small and midsize cars. The plant's first model will be an upper-midsize "C/D" segment car, he said.

A second plant making larger cars will be opened two years later in Daqing, north-west China, Mr Jacoby said. The company will build an engine plant in Zhangjiakou, near Beijing, he said.

Volvo is trying to parlay its Chinese ownership and late start in the market to its advantage. "We now have the freedom to establish our industrial footprint in the tier two or tier three [cities] of China," its chief executive said.

Geely's acquisition of Volvo in 2010 ranks as the highest-profile acquisition yet by a Chinese producer of a western carmaker. Wen Jiabao, China's premier, is due to visit the Swedish company's Gothenburg headquarters on Tuesday, Mr Jacoby said.

In the car industry, however, Volvo is seen as a smaller player that needs to build scale and seek partners in order to underwrite its investments in technology. The company sold 449,000 vehicles in 2011 and will sell more this year, despite depressed demand for cars in Europe, which is still its core market.

Volvo is making progress in its search for a partner with which to develop small cars and is speaking to "a couple of" European and Asian producers, Mr Jacoby said, without identifying the companies.