Volvo chooses Chengdu as first China plant, source says
STOCKHOLM (Bloomberg) – Volvo Cars, the Swedish automaker acquired by Zhejiang Geely Holding Group Co. last year, will build its first Chinese assembly plant in the city of Chengdu, a person with direct knowledge of the plan said.
The Swedish carmaker's supervisory board signed off on the new factory at a meeting Tuesday, said the person, who asked not to be identified ahead of the official announcement Feb. 25. Volvo spokesman Stefan Elfstrom declined to comment.
Volvo plans to hold a ground breaking ceremony in Chengdu on March. 1, signaling the beginning of its factory construction, the person said Tuesday.
The Chinese factory will probably have an annual capacity of 100,000 cars, and may open in early 2013, spokesman Olle Axelson said prior to the board's vote. Volvo currently makes its S40 and S80L models for China at a factory co-owned by Ford and Chongqing Changan Automobile Co.
Chinese growth is key to CEO Stefan Jacoby's goal of doubling sales to 800,000 cars in 10 years. Volvo Cars, which Ford Motor Co. sold to Zhejiang Geely in August for $1.5 billion, aims to sell 250,000 cars in China by 2015, up from 30,522 in 2010, spokesman Per-Ake Froberg said.
"China will be the biggest contributor to meeting the 800,000 unit global target," said Ashwin Chotai, a London-based managing director of industry consultant Intelligence Automotive Asia. "Stepping up local production is a very important step in being successful in the China market."
Volvo Cars was considering Chengdu, Daqing and Shanghai's Jiading district as possible locations, Axelson said yesterday. Zhejiang Geely owns 51 percent of Volvo Cars, while Daqing has 37 percent and Jiading has 12 percent.
Economic growth and government incentives boosted China's vehicle sales by 32 percent to 18.1 million in 2010, helping the nation surpass the U.S. as the world's largest auto market for a second year.
Volvo's main rivals boosted their China sales last year. Volkswagen AG's Audi sold 227,938 cars in China last year, up 43 percent from 2009. Daimler AG's Mercedes-Benz sold 148,400 cars, more than double the previous year, while BMW AG sold 168,998 units, an 87 percent gain.
Zhejiang Geely, which sold more than 415,000 vehicles last year, aims to boost sales and production this year by at least 18 percent, the company said on January 6.