Volvo Cars has started production of its bestselling XC60 crossover at its plant in Chengdu, expanding its production in China on the back of strong sales growth.
The Volvo XC60 is the second model to be produced in Chengdu after the plant started production of the Volvo S60L long wheel base sedan in November 2013.
Adding the XC60 to the Chengdu production line also means that the plant will add 500 new manufacturing jobs, bringing the total headcount in the plant to around 2,650 employees. A new working time system will secure the required increase in output.
The XC60 is the best-selling Volvo model globally and in China.
Globally, XC60 sales have increased 20.4 per cent to 98,309 cars in the first nine months of 2014, while sales in China are up 32.3 per cent to 24,940 cars over the same period. Earlier this year, the XC60 passed the 500,000 cars sold mark since it was launched in 2008.
“The start of XC60 production in Chengdu is the latest milestone in Volvo Cars’ transformation,” said Håkan Samuelsson, President and CEO of Volvo Cars. “It will be instrumental in boosting Volvo’s overall growth in what is now our largest market.”
The Chengdu plant is located in the Chengdu Economic and Technological Development Zone in central China. Annual production capacity of the plant is 120,000 cars.
Volvo Cars also has a plant in Daqing, northeast China, where assembly has started of the Volvo XC Classic, a locally-built variant of the first-generation Volvo XC90 for the Chinese market.
Furthermore, Volvo Cars operates an engine plant in Zhangjiakou, northwest of Beijing, which has been operational since the autumn of 2013 and supplies engines to Chengdu and Daqing.
All of the company’s operations in China have been developed according to the Volvo Cars’ global standards and processes used in the Torslanda and Ghent plants in Europe.
“The Chengdu plant is absolutely on a par with our European plants,” said Lars Danielson, Senior Vice President Volvo Cars China Operations and CEO of Volvo Car China. “Whether it is in terms of quality, installed technology and equipment, working environment and safety or environmental performance, our plant in Chengdu matches Volvo Cars’ global standards and requirements.”
Overall Volvo Cars sales development in China has been strong this year, with retail sales so far up 36 per cent compared to 2013. Volvo Cars is growing considerably faster than the premium segment in China, taking market share from its key competitors.
Apart from the XC60 and the S60L, other strong sellers in China are the segment-leading V60 and the V40 range. Volvo cars are currently sold at over 160 dealerships in China.
“Chinese customers do not have lower expectations than Europeans. They expect premium quality products,” said Mr Danielson. “Customers also have plenty of choice in the highly competitive market in China. That is why we make sure to deliver high-quality Volvo cars out of Chengdu which are at least as good as the cars we build in our European plants.”
Volvo Car Group in 2013
For the 2013 financial year, Volvo Car Group recorded an operating profit of 1,919 MSEK (66 MSEK in 2012). Revenue over the period amounted to 122,245 MSEK (124,547 MSEK), while net income amounted to 960 MSEK (-542 MSEK). Global retail sales for the year amounted to 427,840 (421,951) cars, an increase of 1.4 per cent compared to 2012. The operating profit was the result of cost control and strong sales and was further tangible proof of Volvo Car Group’s progress in implementing its transformation plan. For the full year 2014, the company expects to stay in black figures and predicts to record a global sales increase of close to 10 per cent.
About Volvo Car Group
Volvo has been in operation since 1927. Today, Volvo Cars is one of the most well-known and respected car brands in the world with sales of 427,000 in 2013 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding (Geely Holding) of China since 2010. It formed part of the Swedish Volvo Group until 1999, when the company was bought by Ford Motor Company of the US. In 2010, Volvo Cars was acquired by Geely Holding.
As of December 2013, Volvo Cars had over 23,000 employees worldwide. Volvo Cars head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars head office for China is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium) and Chengdu (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China) and body components in Olofström (Sweden).