Joeb427

iTrader: (1)

Volvo prepares to send 'Made in China' cars to US
Associated Press By JOE McDONALD
April 23, 2015 9:02 AM



.http://finance.yahoo.com/news/volvo-...--finance.html

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CHENGDU, China (AP) — On the verge of exporting the first "Made in China" cars to the United States, Volvo is determined to show they are as good as vehicles it produces in Europe.

In contrast to its European factories that check a few completed cars from each batch, every vehicle that rolls off Volvo's 3-year-old assembly line in this city in China's southwest goes through a five-hour battery of tests on a driving track. Once a month, or three times as often as in Europe, Volvo tears apart a finished car in Chengdu to examine the quality of welds and other work.

The effort to persuade Americans to buy a premium car from China is a new step up in Volvo Car Corp.'s campaign to establish itself as a global luxury brand following its 2010 acquisition by Chinese automaker Geely.

"I have heard no customer ask me where his car is built. It is built by Volvo and is Volvo quality, and of course Chengdu will be exactly the same," said CEO Hakan Samuelsson. "I am quite confident that we will demonstrate that."

The sedan due to be exported from Chengdu is the S60 Inscription, based on Volvo's S60L, a version of the S60 sedan designed for China with an extra eight centimeters (three inches) of rear seat legroom for buyers who have a driver and ride in back. Volvo follows automakers including Cadillac and Mercedes Benz that sell extended sedans for the distinctively Chinese market of "rear seat customers."

In June, the first U.S.-bound S60 Inscriptions are to be shipped down the Yangtze River to Shanghai, then across the Pacific to the United States. Volvo expects to send about 5,000 per year to the United States, according to Samuelsson. He said Volvo has no plans to "massively export" but, since that model will be produced only in China, will send a few to add to its U.S. lineup.

The decision follows a string of product quality scandals in the U.S. over faulty or tainted Chinese goods ranging from tires to toothpaste.

Still, Americans are comfortable enough buying Chinese-made products that the location of Volvo's factory is unlikely to matter so long as the company maintains its quality standards, said industry analyst Yale Zhang of Auto Foresight, a Shanghai research firm.

"Many things are selling in America that are made in China," said Zhang. "Now it's just another one, a foreign brand that is a car."

Exports of Chinese-produced cars to the United States, even under a European brand, are a milestone for the ruling Communist Party, which wants to see its auto industry expand into global markets.

A handful of China's young but ambitious auto brands have announced plans to export to the United States or Western Europe only to find they could not meet emissions and safety standards.


The company wants its Chinese auto factories in Chengdu and in Daqing in the northeast and its engine plant in Zhangjiakou near Beijing to be seen as an equal part of that network with the same technology, components suppliers and quality standards. The company says the Chengdu factory's air emissions will be cleaner than the average auto plant in Europe.

Volvo is planning a U.S. assembly plant and says the location will be announced in the next few weeks.

"We have to explore the global market," the founder and chairman of Geely, Li Shufu, told reporters during the Shanghai auto show this month.

Other foreign brands including GM export some Chinese-made vehicles to other developing markets but most say they need all their production capacity to supply China, the biggest auto market by the number of vehicles sold.

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Instead of being absorbed into Geely, which also sells cars under its own name, executives say the 2010 acquisition liberated Volvo, which had been a unit of Ford Motor Co. and shared vehicle platforms and components with Ford brands. Following the acquisition, Volvo launched an $11 billion campaign to create its own technology and models and to expand its factory and sales networks.

"Everyone tells me that we are now more independent than we have ever been," said Samuelsson.

2014 was Volvo's best year to date, with sales up 9 percent to 465,866 vehicles. Profits were 2.2 billion kronor ($252 million) on revenue of 130 billion kronor. China was its biggest market, accounting for 17 percent of sales, followed by Sweden at 13 percent and the United States at 12 percent. This year, the company says it aims to exceed sales of 500,000 vehicles for the first time.

Volvo is working with Geely on developing shared vehicle platforms. Li, the Geely chairman, said the Chinese brand wants to draw on its Swedish sibling's know-how in safety and in cleaning the air inside the vehicle — an important feature in China's smog-choked cities. Geely has just launched its first vehicle made with Volvo technology, the Borui sedan.

With that partnership, "Geely's products can develop much faster than other competitors," said Zhang, the analyst.
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Li says he has avoided telling Volvo's Swedish managers what to do, because he wants to protect the special qualities of a brand he admires. When asked whether Volvo might cut prices in response to a slowdown in the Chinese auto market, Li said a reporter would have to ask the Swedes.

"Li Shufu is a very smart guy," said Zhang. "He understands the gap between the two brands and he purposely tried not to interfere."

One area where Li played an active role with Volvo was in developing the extended sedan, according to Samuelsson. He said Volvo needed a Chinese-style vehicle but, with its roots in Scandinavia, where most buyers drive themselves, lacked the right experience.

"His opinions have influenced this as a very experienced 'rear seat customer'," said Samuelsson.

Volvo also has gained from its Chinese ownership, a status that exempts it from regulatory handicaps faced by foreign-owned automakers in China.

"We can move much, much faster," said Lars Danielsson, a Volvo senior vice president in charge of China.

mmarshall

This is basically the way aircraft engines are made.

chromedome

Having sat in these made-in-China S60's, I can't tell the difference between these cars and the Swedish originals. Geely may have made dire cars before but they're doing a good job with Volvo assembly. Heck, the Toyotas, Hondas, Nissans, Peugeots and Citroens that roll off Dongfeng Motor Group assembly lines are comparable to cars from the rest of the developed world. Japan-made cars still have an edge when it comes to that extra quality touch.

OceanView

So will these cars be less expensive since the cost to manufacture is less or does Volvo think the brand alone is strong enough to attract buyers?
I would think Volvo would need to be $5-10K less than similar cars to sell in the US.

Joeb427

iTrader: (1)

Volvo's have very big discounts now.

spwolf

how do you know how well they do until they actually come here and 3-4 years pass? Fact is that car made in China, will use most of the parts coming from Chinese suppliers. There is a reason other manufacturers dont export from China.

bitkahuna

iTrader: (20)

we're only a few years away from WAVES and WAVES of cars coming from China.

it will happen. some will protest. consumers won't care and will vote with their wallets.

mmarshall

We'll see. That's what we have been hearing for the last 15 years.

nipponbird

You have no cars from China yet? They came here in 2007 with a lot of differently named mini trucks from different manufacturers, but about all with Toyota 4Y based engines and previous generation (1996 -2004) Isuzu KB based cabs.
Some fell by the wayside, but a company like Great Wall Motors (GWM) have a firm following now with quite a handsome mini truck which has evolved from the said humble beginnings to an in-house 2 litre state-of-the-art designer Diesel, six speed manual etc etc, and a competitive SUV called the H5 .
To be quite objective I can understand the scepticism over there, here we also looked at these vehicles with a lot of apprehension, but if what they've achieved in eight odd years here, is anything to go by, I would say the Chinese invasion might yet eclipse the Japanese tsunami of the sixties and seventies.

Although I'm not buying into the Chinese car thing yet, I must mention that you can buy said GWM truck in double cab 4x4 (Borg Warner) form, for the equivalent of USD 20K and you can do the work with it of a Toyota Hilux which costs double. OK one would think it will start falling apart the moment you drive it out of the showroom door, but there are guys here who report 150,000 trouble free kilometres and still going.

spwolf

thats hard to believe since Chinese cars dont sell well in China.

mmarshall

Yes, where you live, you have been getting Chinese-made products regularly, because your country's safety/emissions/standard-equipment demands are probably not as strict as those here in the U.S. Plus, the customers themselves there are probably not as picky about what kind of vehicle they get and what kind of image it has.

Also of note is that you mention most of the Chinese-made vehicles you get are light trucks. Here in America, we have had a 25% tariff on imported trucks for decades......one reason why most of the ones sold here are also built here in American plants.

Chinese-made vehicles here in the U.S., while not necessarily nonexistent, are currently quite sparse indeed, though, if Volvo goes through with their plans to export some here starting this year, we might see some sold under their nameplate. But I don't expect to see "Made in China" printed on a lot of new doorjambs here for some time yet. What is (probably) a lot more likely is a sharp increase in Mexican-built vehicles here, because, even taking labor costs at the plant into account, shipping costs are usually a lot lower from Mexico than China.

chromedome

Foreign cars assembled in China - everything from VW and Toyota to Cadillac and BMW - use the same components as the rest of the world. A small portion of those components may be made in China but they're made to global manufacturing standards. I don't think big players like Toyota and VW are dumb and greedy enough to use second rate parts when cars prices in China can be double that of US prices.

Cars from local Chinese manufacturers, on the other hand, I wouldn't touch with the proverbial barge pole. They fulfill the market demand for cheap transportation but at the cost of shoddy components, poor engineering and dire crash test results. It seems like the big assemblers such as SAIC and FAW are content with making other companies' cars instead of doing more homegrown R&D. It's funny that VW can be considered the Chinese national car, judging by the hordes of Golfs, Jettas and Passats on China's roads, with the black Audi A6L being the usual government car.

Blackraven

That's true.

That being said however, if that were the case, then we shouldn't be buying Apple products since most of these are Made in China.

As for China-made cars and Chinese-branded cars, they will get there eventually but for me, there is still work to be done. It took many many many years for Hyundai, Kia and Korean branded cars to reach a world-class standard. This is what the Chinese auto manufacturing industry has to go through as well.

We'll see by year 2020.

P.S.
I will say that I am cool with buying:

-Taiwanese cars (Luxgen)



AND

-Malaysian cars (Proton)

chromedome

Anything is better than a Luxgen or a Proton I don't know how these small manufacturers can survive against much better engineering and economies of scale by the big players. They can sell to marginal markets but that's not enough to give them R&D cash to compete against the likes of PSA Peugeot Citroen and Mazda, let alone Toyota and GM.

On the other hand, I've only had a small sunroof rattle on my China-made Euro /JDM Accord, the same car as the TSX in North America. The engine was cast and assembled in a Wuhan plant while most of the car's components came from Japanese and global suppliers. China-made Volvos have a similar supply chain and if they're built to the same standards as the old Swedish factories, then there's nothing to worry about.

Blackraven

^^^
Hmm....what I'm referring to is Luxgen and Proton versus Mainland-China brand cars.

I would rather buy a Luxgen MPV or Proton Exora over a tin-can Chery QQ or a car from Geely or BYD cause those China brands are just not there yet.

At least not until year 2020. I do hope that by then, the local Chinese car brands would have a world-class car product.