What Happened to the Proposed Volvo China Boom?

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In 2010 Geely acquired Volvo, and then in 2012 the government announced it would buy more locally made cars rather than Audis. It was largely thought that Volvo, as a Chinese owned company, would get a major leg up in the 2012 sales market, but the opposite has happened, sales fell.

Ford established its joint venture with Chang’an Automobile Group in 2001 as a 50:50 joint venture between the two companies, production began in 2003 with knock down kits but was soon ramped up to actual production, at this time Ford was running its Asia operations from Thailand so it didn’t have an edge in the Chinese market at that time. In March 2006 Ford announced it would also begin assembling Volvo vehicles at the Ford-Chang’an joint venture, the first model to roll down Sino-American production lines in Chongqing was the Volvo S40, 7 years later the S40 is still rolling down the lines, occasionally at least.Euro luxury sales What Happened to the Proposed Volvo China Boom?

Since 2006 only the S40 and S80L have been produced in China, the S80L is assembled as a semi knock down product and remains uncompetitive when compared to the Audi A4L or BMW 3-Series.  However, Volvo also imports the C30, XC60 and X90 as well as the S60 sedan, the latter seems to be performing very well so far but it is obviously being pulled back by an aging fleet in the rest of the Volvo dealership.

Are Volvo suffering from a Chinese effect? The China Daily is trying to paint such a picture. Chinese consumers, in my experience, will try to buy a foreign brand where they can unless of course the Chinese brand is from a major manufacturer that has a decade or more of strong experience in this sector, see Hisense for TV’s or Haier for washing machines or other home electronics for good examples.

Are Chinese car buyers staying away from Volvo due to it being a Chinese owned brand? Personally I do not believe that the vast majority of Chinese car buyers are aware of Volvo’s Chinese parentage, in fact the greater issue is that Volvo’s product range in the Chinese market is so wildly out of date that Chinese consumers are not even considering cross shopping them with other European luxury brands, or even the likes of Buick or Chevrolet. The S40 has been on the market since 2007, the XC90 is a decade old and a replacement has been due since May 2011, the C30 with only three doors is not so favored by Chinese consumers who seem to always prefer 4 or 5 doors. The S80L, like the S40, is woefully out of date when compared to the A6L or 3-Series. The XC60 SUV seems to be highly competitive when compared to the Audi Q5, although it is imported the XC60 offers the same level of specification (albeit in FWD only with the 2.0T) and pricing as the Chinese made Q6. Only the Volvo S60 and XC60 are the only viable products in the Volvo China range, the new V40 hatch will launch in China later this year but again as imported models they won’t be commanding mass sales in the short term.

If Volvo are to succeed in the Chinese market expanding local production is a must, expanding the model range to include family MPV’s and building on the Volvo stereotype for being safe and reliable vehicles is a must for the brand, along with removing dead wood from the line-up.

Later this year the first Chinese made Volvo products will launch in Chengdu, the S60 is getting the “L” treatment in the form of a stretched wheelbase to make it more palatable for Chinese tastes, hopefully this will be followed by the V40 and XC60. More factories in Shanghai and DaQing will also be introduced which should boost Volvo’s Chinese sales considerably, but the dream of every Central Government Mandarin driving in an S80L still seems very far off for now, Audi won’t be loosing any sleep in the short term.

About the author  ⁄ FrankF

Frank entered the automotive industry via his father's instructions. He grew up with cars around him, especially as his father was a major auto restorer, Frank's childhood was spent passing beers, tools and coffee to his father whilst he explained the ins and outs of engines. Frank now works in the Chinese car industry at a specific manufacturer.

4 Comments

  • dragin
    January 22, 2013

    India embraced Jaguar Rover as one of its own, and thus it’s booming, while China treated the newly purchased Volvo like an alien, and hobbled its progress, even delaying the approval of it as a joint venture partner of Geely.

  • Gerald
    January 22, 2013

    I believe there are political factors that are hampering Volvo’s growth here. Even though Volvo is now owned by Geely, the domestic partners of the other luxury brands still carry a lot of sway with the gov’t.

  • Gerald
    January 22, 2013

    By the way, I really enjoy reading your articles Frank. They are full of good information and I also like writing style. Keep up the good work!

  • I __ H a t e __ C h i n a
    January 24, 2013

    The reason Volvo’s struggling is because of the lack of financial muscle on Geely’s part. Expansion cost tens of billions, but Geely simply doesn’t have it. Volvo’s trying to come up with new platforms on its own by partnering with another non-Chinese automaker, but the non-Chinese automaker are hesitant to partner with Volvo on the fear that jointly developed technologies would flow back to Geely. So Volvo has entered a death spiral, and will follow the path of its Swedish rival Saab in 5~10 years.

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