Volvo driving for tripling of auto sales
By Nin Yuan (China Daily)
Updated: 2004-06-09 10:07

The Swedish-based Volvo Car Corp is aiming to more than triple its sales in China within the next several years.

The company, a member of Ford Motor Co's Premium Automotive Group, expects to reach annual sales of 10,000 cars on the Chinese mainland in the coming years, up from almost 3,000 units last year, said Hans-Olov Olsson, president and chief executive officer of Volvo.

Mainland sales are expected to increase by 20 per cent this year, Olsson said.

"The premium car market in China will grow to more than 300,000 cars (annually) over the next five years from 100,000 units, and we want to be part of it," he told China Daily.

"China will be the No 1 priority market... potential in China will be bigger than Japan in the long term for us."

Volvo aims to lift its global sales to 600,000 cars in a couple of years - 300,000 in Europe, 200,000 in North America and 100,000 in Japan and other parts of Asia - up from 415,000 units last year.

Battles are tipped to intensify over a short period of time in China's premium car market as more of the world's luxury carmakers are entering into local production.

"All of the foreign luxury car manufacturers will have to depend on local production, instead of exports, if they want to see large sales volumes in China, due to competition and government policies," said Li Chunbo, an auto analyst with Citic Securities Co.

Mercedes-Benz, of German-US giant DaimlerChrysler, will start to assemble its E-Class sedans in Beijing at the beginning of next year.

BMW began making its 3 and 5 series sedans at a joint venture plant in Northeast China last year.

The market is mainly controlled by the Volkswagen-owned Audi, which kicked off local production in China more than 10 years ago.

"We are in the process to coming into local production in China," Olsson said, declining to reveal any details.

Volvo will likely use Ford's facilities in China to produce cars because "this way will be in line with the government's new auto policy and will also be economical," Li said.

The new auto policy, which was launched last week and says that if a foreign automaker controls another foreign automaker - such as the relations between Ford and Volvo, they will be treated as one entity in China.

The policy also says a foreign automaker is permitted to have two joint ventures with different partners in China to produce the same types of vehicles, unless it joins forces with its existing local partners to merge other Chinese companies.

Ford now runs joint ventures in China with Chang'an Motor Corp in Chongqing Municipality and Jiangling Motor in Jiangxi Province.

Volvo is speeding up efforts to build sales and service networks in China as part of preparations for future local production.

"We plan to double our sales networks in China within the next five years," Olsson said.