Volvo Looks To Expand Market Presence In China

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The Swedish car brand Volvo recently announced that it will invest over US$10 billion in the emerging Chinese market and build up more factories to reach a higher sales target in the next five years.

As a foreign brand acquired by the Chinese auto company Zhejiang Geely Holding Group last year, Volvo did not present a very desirable sales record in 2010. Under new ownership, the company is hoping to raise the total sales in China from last year's 39,000 to 200,000 vehicles by 2015. It also disclosed the plan to increase the amount of dealerships from the current 106 to 220 in next five years.

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Volvo hopes to benefit from its new Chinese owner while selecting the new locations for its manufacturing plant. The company plans to locate one of its future factories in Chongqing, where Geely also has a plant established. The two brands will be sharing manufacturing services, including infrastructure and logistics.

Another new Volvo factory will stand in Daqing, a city of Heilongjiang Province in Northeastern China.

Although enjoying a number of benefits by being a Chinese company in the Chinese market, Volvo CEO Stefan Jacoby told CNN in an interview that the brand images of Volvo and Geely have little in common.

Both Jacoby and Tour Quế Lâm Geely's board chairman Li Shufu agree that the two car brands target different customer groups. While Geely is designed for the low-end market, Volvo defines itself as a luxury brand with major competitors such as BMW, Audi and Mercedes.

Seeing China surpass the United States to become the biggest auto market by sales in 2009, and realize another 33 percent increase in car sales to 13.7 million vehicles in 2010, Jacoby admitted that Volvo has lost the early-bird advantage in China. However, he hopes the pairing of the famous European company and the young upstart Chinese brand can help Volvo catch up in the competitive, yet profitable market.

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