SHANGHAI -- Volvo Car Co.'s aggressive expansion will not include a new flagship sedan to compete against the BMW 7 series and Mercedes S class.
"It is not in our midterm or long-term strategy right now," CEO Stefan Jacoby told reporters at the Shanghai auto show last week. "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 it could compete with German luxury brands.
That proposal appears to be dead for now.
"It is too early to enter the S-class-size 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 products and build production capacity in China. It will build an assembly plant in the city of Chengdu and will decide in a few months whether to build a second Chinese plant, Jacoby said. He did not indicate the cost of the Chengdu plant, which is scheduled to open in 2013.
Initially the plant will produce 125,000 units annually, although Volvo could 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.
Volvo aims to sell as many as 200,000 cars annually in China by 2105. The company also may export some vehicles from China.