Volvo Car Group announced it is going to build a new manufacturing facility in the United States. The investment is worth some 500 million USD. The location and other details will be announced later.
Volvo dealers are satisfied with the announcement. The company aims to sell 100K units per year in USA. The worldwide goal towards 2020 is even loftier, with 800K a year, 200K of which in China. In Europe sales are expected to continue lagging, with perhaps minimal growth taking place.
Volvo recently reported record sales of almost 130 billion SEK and a 2.2 billion SEK net profit for fiscal year 2014. It sold 465 866 cars in 2014, over 80 000 of which were sold in China that has become its main market ahead of the U.S. after a manufacturing site was opened in Chengdu couple years ago. Volvo which has its roots in Sweden used to be owned by Ford Motor Company (NYSE: F). It will now start competing ever-more heavily on Ford's home turf.
Volvo Car Group's parent company is Zhejiang Geely Holding (SEHK: 0175). The subsidiary is Headquartered in Gothenburg, Sweden and production facilities are currently located in Sweden, Belgium, China and Malaysia. For Swedish operations it is good news that the company is doing well. The Chinese owners have taken a hands-off approach in regards to local operations and it has been well received. On the other hand the vision to become a premium brand car maker leaves some worrying on the importance of Swedish operations going forward.
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