Volvo says it won't be building in North America
by Dan Roth on Jun 27th 2007 at 5:34PM 
There have been periodic rumors of a United States assembly plant for Volvo cars since at least the early 1980s. There was a North American construction arm of the Swedish carmaker, situated in Nova Scotia, but that plant has been shuttered for several years now. Volvo CEO Fredrik Arp has told Automotive News that an American plant would take an unacceptably long time to pay for itself, according to the automaker's studies. A weak dollar doesn't help the economic argument for a plant in the States, either. Volvo can currently handle its goal of 600,000 units worldwide, which they have yet to meet. Current plant capacity is good for 590,000 vehicles, so it goes building any new plants, Volvo would be wise to fully utilize its current capacity. The automaker is looking to markets other than North America to drive growth in the coming years -- China, India and Russia all look to be emerging soon as major Volvo buyers.
Arp would not be pressed regarding rumors of Volvo being put up for sale by parent Ford, but he did comment that the historically green-minded automaker has its finger on the pulse of viable alternative powertrains for the US market. Diesels and alternative fuels are big in Europe, but Volvo's not going to just forge ahead in the US with those technologies. Rather, what they intend to do is watch and see what green platform takes off here, and follow on quickly with their own version of whatever that turns out to be. Volvo is too much of a niche player in the US market to risk developing something that may be met with a yawn by the US consumer. Up for sale or not, it looks like Gothenburg's Rollers have their eyes on the brass ring.
[Source: Automotive News - sub req]
http://www.autonews.com/apps/pbcs.dll/article?AID=/20070626/ANE01/70626009/1116/rss03&rssfeed=rss03
Reader Comments (Page 1 of 1)
Seminole 5:57PM (6/27/2007)
What Volvo needs to spend time doing is making a reliable car. My 2005 S40 2.4i has been one giant problem. I wish I was in the financial situation where I could just get rid of the heap of junk and go get a new vehicle. I've been having radio failures, interior pieces falling off, and more. The newest problem is that my front axle needs to be replaced. According to the service manager, "These things are built by machines and you can't guarantee perfection all the time. Axles are common things that need to be replaced." Smells like bull to me. Even one of the techs told me when I was talking to him one time, "The Volvo's today aren't built like they used to. They [the cars] are just riding off the reputation of the old ones."
Reply
wally 6:19PM (6/27/2007)
Think about it !!!! It's now an over priced Ford. Same goes for Saab & GM.
mike7 6:45PM (6/27/2007)
Sad to hear of your problems.
I've always like the V50, but, the way Volvo packages the car, I can't get 4wd and the small engine. They Force me to by a gas guzzling turbo.
Sure would have been nice to get that V50 with the Euro 1.8 diesel.
Reply
Robert Aitchison 6:46PM (6/27/2007)
Of course I'm sure it has nothing at all to do with the fact that since Volvo is owned by Ford, that any Volvo plants in the U.S. would be infected by the UAW.
Reply
Barney 7:29PM (6/27/2007)
Perhaps Volvo is looking at the quality of American made Toyota's.
Reply
Ningchuan Zhu 1:39AM (6/28/2007)
Somebody slept through Econ 101. "A weak dollar doesn't help the economic argument for a plant in the States, either"? It's the exact opposite. A weak dollar means a Volvo manufactured in Europe and imported in the U.S. is going to be more expensive. Because manufacturers can't raise prices as quickly (or as much) as exchange rates fluctuate, this puts pressure on the profit margin. If they built a plant in the States, they would become less exposed to currency fluctuations (this is one reason Honda, Toyota, and everybody else built plants in the U.S.). Plus, in theory at least, Volvo could even export vehicles from the U.S. to Europe, as BMW and Mercedes-Benz already do -- those vehicles would cost less to manufacture in euro terms.
Reply
Dan Roth 9:40AM (6/28/2007)
It sounded economically backward to me, as well - but that's what the source article stated. Puzzling it out a bit, I figured that since the cars would likely be assembled from CKD kits (complete knock-down), and parts wouldn't be sourced from local OEMs, the economic feasibility is skewed.
Part of why Toyota and Honda have plants in the US is to also avoid import tariffs, though it also gets around shipping fully assembled cars across the planet.