Volvo set to export Chinese cars

VOLVO is set to become the first western motor manufacturer to unleash mass-made Chinese-built luxury cars on global markets, including Europe, Asia Pacific and the United States.

The Chinese-owned Swedish company last night announced it would not only expand its Chinese operation into a global manufacturing hub, but also shift production of its new S90 flagship sedan from Europe to its Daqing plant in northern China.

Australia is almost certainly in line to receive some of the vehicles, with Volvo Car Australia (VCA) managing director Kevin McCann recently telling GoAuto that he would be open to importing Chinese-made vehicles.

“If there was ever a model that was built in a Chinese factory that suited our market, we wouldn’t baulk at the idea that it is built in China because we know that our global standards are the same,” he said.

Today, VCA PR director Greg Bosnich told GoAuto that the company was awaiting direction from head office on how the move would affect this market.

“We do not know any time frame or how it will affect us,” he said.

Mr Bosnich said the expansion of Volvo production in China had been a good indication that exports would follow, but that details were still being sought.

The all-new S90 that was launched in Australia last month is currently made in Sweden.

According to US reports, S90 exports from China will start next year.

The Volvo announcement comes hard on the heels of an announcement by Volvo owner Zhejiang Geely Holdings that it is planning a global rollout of a new vehicle brand, Lynk & Co, with cars made in China on Volvo’s Compact Modular Architecture (CMA).

Apart from S90 production at Daqing, Volvo will build the mid-sized S60 and related vehicles in western China, at its Chendu plant, as well as 40-Series small vehicles at a new factory being built at Luquiao, 350km south of Shanghai.

The Luquiao plant, which is owned by Geely Auto, will also make Lynk cars for both China and export markets.

Announcing the new manufacturing strategy, Volvo Cars president and chief executive Hakan Samuelsson said: “With three plants – and the designation of one car line for each plant – Volvo creates an efficient production structure ensuring future capacity for growth.”

The strategy is sure to be closely watched by other western manufacturers, many of whom have toyed with the idea of shipping low-cost cars from China but have been held back by fears of western customer perceptions of Chinese build quality.

Volvo stressed that all the Chinese-built cars would be built to global Volvo Car Manufacturing System (VCMS) standards.

Last year, Volvo dipped a toe in the export water when it started shipments of a variant of the S60, called Inscription, to the United States.

While Volvo is ramping up its Chinese production, it says it will continue to make at its European factories in Sweden and Belgium.

It said the factory at its home base in Gothernburg, Sweden, would continue to make larger cars, including 60 and 90-Series cars, based on the Scalable Product Architecture (SPA), while the Belgian plant in Ghent would build CMA-based cars such as the S40, V40 and XC40.

The Volvo expansion extends to the US where is building a new plant in South Carolina to make SPA-based vehicles from 2018. While Volvo has not announced the specific models it will build there, American journalists speculate it will turn out the next 60 Series, possibly the S60 or XC60 or both.

The announcement of the Chinese export strategy came as Volvo announced it would show the new Daquing-built S90 – including the Chinese-only S90 Excellence version – at this month’s Guangzhou motor show in southern China.

Volvo Cars was acquired by Geely from Ford in 2010. While Volvo production is expanding around the world, Volvo and Geely have concentrated their joint engineering and design operations at Gothenburg.