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Volvo CEO says China plant is key to success under Geely

Automotive News Europe -- July 30, 2010 12:32 CET


STOCKHOLM (Bloomberg) -- Volvo Car Corp.'s success after its sale to Zhejiang Geely Holding Co. will hinge on building a manufacturing plant in China, the Swedish carmaker's CEO said.

“When you look at the car industry in China, if you want to be even a 2 percent player there -- and 2 percent is not a bad aspiration -- you have to have local manufacturing,” Stephen Odell said in an interview late yesterday. “We already have local manufacturing through a contract party, but it's clear Volvo needs more capacity to grow.”

Volvo builds its S40 and S80L models for the Chinese market at a factory co-owned by parent Ford Motor Co. and Chongqing Changan Automobile Co. Volvo will be able to use this plant even after Geely's takeover, Odell said. The 55-year-old CEO, who will leave Volvo to run Ford's European division, said he isn't privy to Geely's plan for Volvo's future manufacturing in the country.

Volvo sold 191,832 cars in the first half, a 20 percent increase from a year earlier. In China, Volvo's fourth-biggest market, deliveries surged 88 percent to 15,497 cars in the period, helped by last year's introduction of the S80L, a longer version of the S80 that's sold only in that market, spokesman Stefan Elfstrom said.

Last year, Gothenburg-based Volvo made about 8,900 S80Ls and 6,200 S40s at the Chongqing factory.

Chinese approval

China's Ministry of Commerce said Thursday it had signed off on Geely's takeover of Volvo, paving the way for completion of the $1.8 billion acquisition that's the biggest Chinese takeover of an overseas automaker.

“Volvo will have an owner that knows China, the biggest car market in the world, better than anybody else does,” Odell said by telephone. “Having manufacturing capacity will only help Volvo in China.”

Volvo plans to hire 500 to 600 temporary workers at its plants in Sweden and Belgium to meet demand and produce its new S60 and V60 models, Odell said. It's the first time Volvo is adding workers since the financial crisis. Odell had cut 4,600 jobs, including 1,200 consultants, at the automaker.

The last time Volvo made an annual profit was in 2005, when it posted a pretax profit of $377 million.

Neither Ford nor Geely has said who will succeed Odell as Volvo CEO. Volkswagen AG is negotiating with its outgoing U.S. chief, Stefan Jacoby, over terms of his departure before he may take over as CEO at Volvo, people familiar with the matter said last month.

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