Volvo to build plant in Chengdu
Swedish automaker Volvo cars, which was acquired by Zhejiang Geely Holding Group last year, is about to build its first Chinese plant in Chengdu, Sichuan Province, according to sources close to the matter.
Ning Shuyong, a spokesman for Volvo China, confirmed to the Global Times that Chengdu could be one possible site for the company's Chinese plant, and a detailed plan will be released later this week.
"Volvo will hold a press conference this Friday in Beijing, and things will be made clear at that time," said Liang Nan, an official with the Chengdu municipal government. Volvo's China strategies will also be unveiled at the press conference.
An official surnamed Zhuge with the Chengdu municipal government also confirmed with the Global Times "Volvo surely will build a production base in Chengdu."
Volvo's Chengdu plant may open in 2013 and will probably have an annual capacity of 125,000 units, said a Reuters report yesterday. And media reports said that Shanghai and the city of Daqing in Heilongjiang Province would be the other two possible sites.
Currently Volvo makes its S40 and S80L models for China at a factory co-owned by Ford and Chongqing Changan Automobile.
"Geely's production base in Chengdu could help Volvo to start operating sooner," said Zeng Zhiling, a Shanghai-based auto industry analyst with JD Power and Associates, saying that this might be a very important reason for Volvo to choose Chengdu.
Zeng also noted that Chengdu and the nearby Chongqing Municipality have the strongest demand for luxury cars in Southwest China, which is another possible reason for Volvo's decision.
Volvo sold about 30,500 vehicles in China in 2010, up 36.2 percent year-on-year. And the company aims to boost the annual sales in China to 250,000 by 2015.
Zeng said that the Chinese market has added strong momentum for sales of luxury cars, but still, he thought that a sales target of 250,000 is a little ambitious for Volvo.
"Volvo's brand image as a luxury car maker could be greatly harmed if the company chooses to boost sales by reducing prices," said Zeng.
Zeng commented that the Chinese luxury car consumers generally prefer bigger cars, which differ from Volvo's low profile and environmentally friendly cars.
But Zhang Yu, an independent auto industry analyst, said in an earlier interview that the general image of Volvo as a low-profile luxury car could gain ground in China, because "the image of Volvo is in accordance with the taste of the rising middle class."
