SHANGHAI – Volvo Car Corp. plans to build a new assembly plant in the city of Chengdu, and will decide in a few months whether to build a second Chinese plant, company CEO Stefan Jacoby said.
However, the Swedish automaker's aggressive expansion will not include plans for a new flagship sedan to compete against the BMW 7 series or the Mercedes S class.
"It is not in our mid-term or long-term strategy right now," Jacoby told reporters at the Shanghai auto show. "That has been decided."
After Zhejiang Geely Holding Group purchased Volvo last year for $1.7 billion, Geely Chairman Li Shufu had advocated a move upscale for Volvo so that it could compete directly against the German luxury brands.
That proposal appears to be dead for now.
"It is too early to enter the S-class-sized market," Jacoby said. "We are concentrating with our new products on our core segments."
Over the next five years, Volvo will spend $11 billion to redesign its products and build new production capacity in China. Jacoby did not indicate the cost of the new plant in Chengdu, which will open in 2013.
Initially the plant will produce 125,000 units annually, although Volvo could eventually expand production to 200,000 units.
There had been speculation that Volvo would convert an existing Geely assembly plant in the southwest China city of Chengdu, but Jacoby said Volvo instead will build its plant on a greenfield site in that area.
In addition, Volvo is building an engine plant in China, and is considering a second assembly plant in the northeast China city of Daqing.
Volvo aims to sell as many as 200,000 cars annually in China by 2105. The company also may export some vehicles from China.