Swedish luxury carmaker Volvo Car Corp plans to start local production in China in the last half the year as part of its effort to accelerate growth and catch up with leading German premium brands.
A new Volvo vehicle plant in Chengdu will begin operation before the end of the year, said Doug Speck, the company’s senior vice-president for marketing, sales and customer service. Volvo was acquired by Zhejiang Geely Holding Group Co in 2010.
A big part of its plans to revive the Nordic brand is leveraging the potential of the Chinese market through local production.
In the first quarter, Volvo’s sales in China totaled 13,780 vehicles, up 26.6 percent from a year earlier. The strong performance made China the company’s fastest-growing market worldwide in the first quarter and the second-largest in sales.
Speck forecasts the premium car market in China will increase more than 10 percent this year and Volvo expects to grow with the segment or outperform it.
To meet the goal, the company plans to bring six new or upgraded models to China this year including the all-new V40 launched shortly before the Shanghai auto show.
The V40 retails between 239,900 yuan and 325,900 yuan. It is equipped with the T5 engine with maximum power of 213 hp. A company statement said the premium compact hatchback was an immediate hit after it went on sale in Europe last year and is expected to be equally well received in China.
Volvo is also showcasing new R-Design versions of the S60, XC60 and V60 at the ongoing Shanghai auto show, their first appearance in Asia. Continued improvement in products is very important for Volvo, Speck said. “We earn more respect as a premium brand because of the products we build,” he said.
The Volvo V60 diesel plug-in hybrid introduced last year in Europe is the first such vehicle in the world. It has been so successful the company is working on additional capacity to meet demand, Speck said.
The next step will be the sale of gasoline plug-in vehicles in markets including China and the US, he said. Brand clarity is another area that he believes is crucial. Speck said that the company finds there are increasing numbers of people who associate success with a “healthy, balanced life” in China. Volvo wants to position the brand around this trend.
“It is consistent with what Volvo means and can differentiate the brand from competitors,” he said. One example is Volvo’s standard, strict interior air quality system across its entire fleet, Speck said.
He noted a recent study of 43 models in the marketplace showing the Volvo S60 has the best interior air quality. “This is an example of how we can make a difference,” he said.
Speck said that Volvo plans to add about 20 new dealer outlets in China in addition to the current network of some 124 dealerships.
Plans call for the number to increase to about 250 by five years from now, Speck said, noting that the company has decided to switch the focus of dealer expansion to smaller cities.
He said many premium brands have established dealerships in the third, fourth and fifth-tier cities in China, places Volvo also needs to have presence to sell cars. At the same time, the company will continue to build its service quality and improve customer experience, he said.