Volvo Moves the Production of its S90 Flagship Model to China

The China manufacturing base is an integral part of Volvo's global strategy. Through this whole strategic plan, we intend to move the production of the most technologically advanced and luxurious models to China, such as the 90 series. The long-wheelbase S90 launched this morning is entirely produced in China, and with China as the production base, it will be exported to overseas markets (Mr. Samuelsson announced earlier at the event that the production of the regular-wheelbase version of the S90, which is Volvo’s flagship sedan, would also be moved from Europe to Daqing, China).

Volvo intends to move the production of the most technologically advanced and luxurious models to China.

Last week, the Volvo Cars Global Manufacturing Strategy Conference and the Volvo All-New S90 Long-Wheelbase Luxury Sedan World Premier took place in Shanghai. During the event, Håkan Samuelsson, President and CEO of Volvo Car Group, and Lars Danielson, Senior Vice President and CEO of Asia Pacific Region gave interviews to mainstream media including International Business Daily, and talked about some hot topics, such as moving production of their most technologically advanced and luxurious model to China, the pace of localization, and the new brand LYNK & CO.

Moving the production of their most luxurious model to China and exporting it globally

Håkan Samuelsson: For various reasons, for example reducing costs and customs duties and being closer to the “second local market” and Chinese consumers, we have launched the “China Growth Plan”. To date, this strategy has been very successful. Fundamentally speaking, it has been mainly about production in China. Five years ago, almost all our products were imported, but now 3/4 of the Volvo products bought by Chinese customers are produced in China. Five years ago, Volvo had only 100 employees in China, but now there are 6,000. In the past five years, Volvo has built three plants and brought them into service – two vehicle assemby plants and one engine plant.

Over the past five years, we have been moving towards our strategic goals. The long-wheelbase S90 sedan, launched this morning, is the most luxurious car ever produced in China and will lay a very good foundation for our further success and ultimately the full realization of our strategy.

Volvo has a very unique strength - its parent company is a Chinese company, so there is no conflict of interest, and China is Volvo’s local market, so the China manufacturing base is an integral part of Volvo's global strategy. Through this whole strategic plan, we intend to move the production of the most technologically advanced and luxurious models to China, such as the 90 series. The long-wheelbase S90 launched this morning is entirely produced in China, and with China as the production base, it will be exported to overseas markets (Mr. Samuelsson announced earlier at the event that the production of the regular-wheelbase version of the S90, which is Volvo’s flagship sedan, would also be moved from Europe to Daqing, China). By utilizing our local strengths in China, and by exploiting the fundamental power of unreserved technology-sharing within the group, we are also contributing to the development of the Chinese auto industry.

The XC90 will see a sales boom

Håkan Samuelsson: The size of the market segment which the XC90 targets is about 250,000 vehicles. In the U.S., this market segment is twice as big. In China, the prices of Volvo’s major models are now being increased from the range of RMB 250,000-400,000 Yuan to over RMB 750,000 Yuan. All our prices are benchmarked against those of the competitors’ models in the same series or class.

In terms of pricing, we have always adopted a consistent global strategy, because our products are very competitive and cost-effective. From the time that the XC90 was launched until now, sales growth has been a little slow, but now that we have built a good market base, the XC90 is ready to see a sales boom.

Lars Danielson: Regarding the price of the XC90, during the sales promotion, we did a lot of work with dealers, including marketing and training, and we also reached a common understanding with them that, from the perspectives of technology and the value it can bring to the customers, our price is very competitive compared with similar products. By setting a price like this, we also hope to deliver a message to the customer - the technologies and the values contained within this product are worth the price we are asking, which is our basic principle in the pricing of the X90.

So far we have localized more than 75% of our models

Håkan Samuelsson: We really regard China as our local market. Volvo started late here, but it can be seen from everthing we are doing now in China that we really are treating this country as our second local market.

In China, we have three plants as well as a new facility in Luqiao and an R&D center in Shanghai. In order to get closer to our Chinese customers, we will further increase our R&D investment in China and design and produce a series of tailored products.

At the same time, we have also established a comprehensive supplier system in China. So far we have localized over 75% of models in China. All these efforts demonstrate that Volvo is not treating China as some target for general business investment. We are creating a comprehensive industrial setup in China because we really regard this country as our local market. I believe, with our solid efforts, our market share will gradually increase.

LYNK & CO is not a competitor to Volvo

Håkan Samuelsson: LYNK & CO and Volvo have completely different brand images and target completely different segments. We never think of LYNK & CO as Volvo’s competitor, just as Audi never regards Skoda as a competitor. These two brands complement and support each other. LYNK &CO’s success will bring greater success to both Volvo and Geely, especially to Volvo’s business development and product promotion. So LYNK &CO is actually an important support rather than a competitor.

With its help, we can enhance our industrial synergy, reduce costs, and better achieve economies of scale. So whether in terms of business or market, LYNK & CO’s success will be really helpful to Volvo.