Volvo enters new stage in its comprehensive premium segment strategy
September 26, 2013 Harbin, China – The founding of Daqing Volvo Car Manufacturing Co, Ltd. (Volvo Cars’ joint venture in China) was today officially announced. The move marks the beginning of a period of rapid development in the localization of Volvo Cars’ production in China, as well as a new chapter in the company’s continued growth in China and its global development strategy. It also signifies Volvo Cars’ entry into a new stage in its comprehensive premium segment strategy. Vice Governor of Heilongjiang Province Zhang Jianxing, Daqing Municipal Party Secretary Han Xuejian, Mayor of Daqing City Xia Lihua, Geely Holding Group Chairman Li Shufu, and Volvo Car Group Senior Vice President of China Operations Lars Danielson all attended the founding ceremony.
Volvo Cars’ industrial layout in China was formally approved by the Chinese government in August 2013. This included the establishment of a vehicle manufacturing base in Daqing, a powertrain production base in Zhangjiakou, and an R&D base in Shanghai. With governmental approval now obtained, the two factories in Daqing and Zhangjiakou will operate under the joint venture.
Daqing is situated at similar latitude, and with a similar geomorphic environment and weather, to Gothenburg, home of Volvo Cars’ Sweden headquarters. The two cities are also similar in terms of environment, livability, and their social and business environment. Volvo Cars’ ongoing global growth efforts have clear synergies with Daqing’s need to transition away from a resource-based economy. These complementarities have brought Volvo and Daqing together.
Located in the hinterland of Northeast China, with land and sea links to six Northeast Asian countries, Daqing has unique geographical advantages. Trade and high-end consumption trends in the region will provide strong impetus for Volvo Cars’ development in China. At the same time, Daqing is undergoing a critical period in its own economic transition, as well as changes in its developmental impetus and ecological construction. In such a crucial period, Daqing’s forward-looking strategic vision, practical development policies, and market potential made it a highly attractive location for Volvo Cars.
Daqing Volvo Automobile Manufacturing Co., Ltd. is located in Daqing’s High-tech Zone, and will be equipped with pressing, welding, coating and assembly plants, as well as relevant auxiliary equipment. The plant is expected to become operational in the fourth quarter of 2013 and to have an initial capacity of 80,000 vehicles. Future capacity will be adjusted in accordance with market demand. By the time the project is in full production, Daqing will account for over RMB 100 billion in vehicle sales, and the addition of 6000 jobs in the area will mark a reshaping of the premium car industry in Northeast China.
Li Shufu, Chairman of Geely Group, commented, “The establishment of a Volvo joint venture in Daqing is an important milestone for the company’s development, both globally and in China. It represents Geely Group’s response to the Chinese government’s call to revitalize the Northeast China’s traditional industrial base and to drive Daqing’s transition away from a resource-based economic model. We hope that the strategic growth of Volvo in China can be combined with Daqing's transformation, and bring more international resources, ideas and advanced technologies to Daqing. We also hope that the continued improvement in Volvo’s industrial layout in China will ensure the sustained growth of the company’s global operations.”
Mayor of Daqing City Xia Lihua added, “Volvo’s Daqing joint venture is a clear example of the city proactively seeking opportunities inherent in economic globalization and industrial upgrading, developing alternative industries, and accelerating and promoting the transformation of a resource-based economy as we move towards sustainable development. It will drive the growth of Daqing into a high-tech, high value-added, international city with a modern industrial base. It will also lay a solid foundation both for the premium car industry in Northeast China and for Volvo’s rapid development in China.”
Volvo Car Group Senior Vice President of China Operations Lars Danielson, said, “Daqing will play an important role in Volvo’s growth strategy in China. Our production base in Daqing will fully adhere to our globally unified Volvo Car Manufacturing System (VCMS) and quality standards for planning, construction and production. Using precise, standardized production methods and world-class premium automotive technology, it will provide consumers with safe, healthy, environmentally-friendly and tasteful Volvo cars with a flavour of Scandinavian luxury.”
Tong Zhiyuan, CEO of Volvo Cars’ business in China and Chairman of Daqing Volvo Car Manufacturing Co., Ltd., commented, “Volvo’s plant in Daqing will abide by the same R&D, procurement, production and quality standards we apply worldwide. At the same time, Volvo Cars will benefit from Daqing’s unique geographical advantages and the pedigree of the production teams here, who will contribute to building a world-class manufacturing base and promoting the transformation and upgrading of China's automotive industry.”
The founding of Volvo’s Daqing joint venture is another milestone in the company’s history following its merger with Geely Group. Volvo has now established a complete operating system and a comprehensive set of organizational functions in China. The establishment of production in China has already seen Volvo Cars’ sales increase, with total sales in August of this year increasing 40.2% year over year to 37,661 units, making Volvo Cars the fastest-growing premium car brand in China. China is now Volvo Cars’ second home and its second-largest market in terms of sales.