China will soon become Volvo’s export hub for most global markets, as the Swedish carmaker owned by Zhejiang Geely Holding Group wants to benefit from the country’s lower labor costs (is anyone surprised?).
Volvo will soon start exporting Chinese-made sedans, including the long-wheelbase S60L (pictured), to the United States, and the XC90 SUV to Russia as early as the end of next year.
Volvo targets exports of about 10,000 S60Ls and a few thousand XC90s each year from China. Last year, the company sold around 62,200 vehicles in the U.S., all made in Europe. Despite consumer concerns about the quality of made-in-China products, Volvo believes it could minimize exchange risks by making China its main production base.
“The dollar and the yuan have the best relationship, a more stable relationship than the euro and the dollar,” an unnamed Volvo executive was quoted as saying by Reuters. He added that Volvo wants to use two assembly plants in China to export to the U.S., Russia, and possibly Southeast Asia.
A Volvo plant in the city of Chengdu began making the S60L sedan late last year, while a second facility is building the XC90 in Daqing. By 2018, the two plants in China will achieve a full capacity of about 250,000 vehicles a year.
Volvo’s global head of media relations David Ibison confirmed that the company would start exports from China, but said timing and target markets had yet to be decided.
By Dan Mihalascu
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