Volvo Car Group plans to export a Chinese-made midsize sedan this year to the US, and is starting to weigh the possibility of building a vehicle factory in the US, people familiar with the Chinese-owned automaker’s plans said.
Both moves would be significant for the auto industry and Volvo’s parent, Zhejiang Geely Holding Group (浙江吉利控股集團). So far, global automakers have chosen not to ship vehicles made in China to the US market in any significant numbers, and efforts by Chinese automakers to export vehicles to the US have foundered.
Volvo is also behind rivals BMW and Mercedes in establishing production in the US, which insulates the German brands from currency fluctuations.
Volvo might also export a large “strategic, flagship” sedan based on a newly developed underpinning technology, said the executives, who work for Zhejiang Geely. That car would be shipped out of China in addition to the Volvo S60L, a long-wheelbase version of the S60 sedan Volvo began producing in the southwestern Chinese city of Chengdu more than a year ago.
The moves are aimed at reviving Volvo’s momentum in the US market, where volume last year fell 8 percent from 2013 to 56,371 vehicles. The US market, which has long been Volvo’s largest market, was replaced by China last year. China bought 81,221 Volvos last year, a 33 percent rise from 2013.
More broadly, the moves are part of Geely’s turnaround strategy for Volvo, which has struggled to go beyond being a brand with an annual volume of less than 500,000 vehicles. Thanks to its focus on China, where the brand expanded its distribution network and product portfolio, Volvo sales volume is on the rise. It sold a total of 465,866 vehicles globally last year, up 9 percent from 2013.
“The S60L offers class-leading rear space, something that has been consistently demanded by US customers. It will be made at Volvo’s plant in Chengdu, China, and will be on show for the first time at this year’s North American International Auto Show in Detroit,” Gothenburg, Sweden-based Volvo spokesman David Ibison said. “The S60L forms just one part of our US revival plan.”
Ibison said Volvo plans to launch seven new products by 2018 and increase US sales to around 100,000 cars per year in the medium term. He declined to elaborate.
Exporting Chinese-produced mainstream passenger cars to the US and other advanced auto markets has been a long-standing goal of China’s indigenous automakers — an objective that has largely eluded the industry.
“It would be a big breakthrough” not just for Geely, but for China’s industry, said James Chao (趙英智), Asia-Pacific director of consulting and research firm IHS Automotive.
“Volvo is not an indigenous Chinese brand but it is wholly Chinese-owned. Perhaps this is the model or strategy that finally works for Chinese companies trying to enter the US market and other markets.”
Chao added that Volvo’s owner, Geely, could follow Volvo into the US market with its own products, perhaps leveraging Volvo’s manufacturing and parts supply chains.
Geely’s purchase of Volvo from Ford Motor Co five years ago surprised many in the auto industry, who doubted that a relative newcomer could turn around the nearly 90-year-old Swedish business while protecting its famous brand.
The S60L was developed originally as a China-specific model to cater to wealthy Chinese consumers who prefer cars with bigger, comfortable rear seats because many of these owners have chauffeurs. Volvo expects to ship roughly 1,500 made-in-China S60L cars to the US this year, compared with the car’s projected volume in China this year of 26,000.
The additional car Volvo plans to export to the US, those executives said, is a flagship large sedan that might be called the S90 which uses Volvo’s new vehicle underpinning technology called “scalable platform architecture” or SPA. The S90 will be a second vehicle based on that new architecture, following the redesigned XC90 sport utility vehicle based on the same technology.
Volvo announced in late 2013 that it would produce “a large premium sedan” based on SPA at a new plant in the northeastern Chinese city of Daqing. At Daqing, Volvo began producing in September last year the XC Classic, the previous generation of the redesigned XC90.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure