Volvo Car Corp. will close its plant in Uddevalla, Sweden, in 2013 because of insufficient volumes for the C70 folding hardtop convertible.
The factory, which is co-owned with Italian car design company Pininfarina S.p.A., produced 10,000 cars last year and is now working at 65 percent of its capacity, Volvo said.
An automaker typically needs at least 80 percent utilization for a plant to be profitable.
"The low volumes in the Uddevalla plant do not justify continued production," Volvo CEO Stefan Jacoby said in a statement on Monday. "A car manufacturer of Volvo's size cannot, from a financial standpoint, justify a plant that manufactures one single model in the low volumes we have today."
Volvo, based in Gothenburg, Sweden, aims to more than double annual sales to 800,000 cars by 2020. It plans to invest as much as $11 billion over the next five years to meet demand in markets including China, where it aims to open two new factories.
Volvo was sold by Ford Motor Co. last year to China's Zhejiang Geely Holding Group Co. for about $1.5 billion.
The 600 workers at the plant will be offered jobs at other Volvo plants, including the main factory in Gothenburg, the company said.
Volvo and Pininfarina agreed in March to end their joint venture. Volvo will buy out Pininfarina in 2013 and then close the factory, it said.
Source: Bloomberg
