Swedish automaker Volvo Cars has announced its plans to make a US $500 million investment into an assembly plant in the United States of America. Though the location of this plant has not been decided yet, Volvo is in advanced discussions with several states and the confirmation should come within weeks. Also, production at this plant is likely to commence in the year 2018.
The sale of Volvo Cars to Zhejiang Geely has given the firm a fresh breath of life and the results are there to see. Not only has Volvo Cars invested more in new models, it has added two factories in China to its list.
According to a report by Fortune, the plant in the United States is going to serve as a hub for both exports and local production. Quite incredibly, the Swedish car maker expects an annual sales return of 100000 units.
Volvo’s decision to open an assembly plant in the United States and not Mexico, where a lot of its rivals firms are present, speaks how much the former market is important in terms of revenue. The production capacity of this plant is expected to be in close proximity to 120000, the figure it clocks at the facility in China. Experts feel that the Volvo XC90 might be pivotal in helping the manufacturer’s cause in the country.
However, it is not going to be easy for Volvo in the United States as compared to 2004, when it recorded sales of 140000 units. The main reason for this is the rise of German firms BMW, Mercedes-Benz and Audi. Other brands in the luxury market that might be a threat to Volvo in the United States are Lexus, Cadillac and Lincoln. Speaking in an interview, Håkan Samuelsson, Chief Executive Officer of the firm, said, “We’re going after a market share of 1 percent with a clear identity that we know is very attractive to some customer groups. It is a tough market – but I wouldn’t say it’s tougher than Europe or China.”
