Volvo Bets Big On Chinese Factories
Volvo’s global sales are on a downward trajectory. The Geely-owned Swedish marker saw its 2012 global sales drop 6%. In the first four months of the year, sales were down 6.4 percent. Two new factories in China are supposed to bring the turn-around, a feature in Reuters says.
Volvo wants to reach annual global sales of 800,000 units by 2020 from 373,000 sold in 2010.
Volvo wants to profit from China’s new command-frugality that (rather ineffectually) frowns on public display of conspicuous consumption. Some drivers are cautious not to look too flashy – “which could play to Volvo’s strengths in quality and solidity,” Reuters says.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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I'm not sure lack of supply is Volvo's big issue. The complaint "People aren't buying our cars, *frowny face*" isn't often countered with "Build more of them!"
A Volvo S60 T5 lease is $2,628 down, $279 a month. That's dirt cheap for anything that wants to be aspirational. Building more of what few want isn't going to build value, and building it in China will do little for brand perceptions in some markets. I know a bunch of former Volvo people that blamed Ford for every problem they had with their S60s and XC70s before swearing they'd never touch another one. Will Chinese ownership and production change their minds? I don't see it.
Of course Volvo bets big on *Chinese* factories, since in a few years' time there'll be no more Volvo plants left in Sweden.
Volvo will end up like Rover.