Report: Volvo May Build North American Plant

[AF News Desk]

Word out of Frankfurt is that Volvo is looking into building a production plant in the United States to target increased sales based on the American Dollar, said company CEO Stefan Jacoby.

The story from AutoNews:

Originally Posted by Ola Kinnander - Automotive News, 9/13/11

Volvo currently has a large foothold in the Chinese market, but no production plants currently
in North America. Though not decided, Stefan Jacoby "The utmost solution would be to have
a North American industrial footprint."

FRANKFURT (Bloomberg) -- Volvo Car Corp. may build a plant in North America, CEO Stefan Jacoby said today.

"One weakness of Volvo cars is the exposure to the U.S. dollar, so we are investigating increasing our sourcing in North America" to balance currency movements, Jacoby told reporters today at the Frankfurt auto show. "The utmost solution would be to have a North American industrial footprint. We haven't made up our mind."

Volvo, which makes cars in Sweden and Belgium and is building a factory in China, also is likely to decide this year to build a second plant in China, in the city of Daqing, Jacoby said.

Sweden-based brand Volvo, which Ford Motor Co. sold last year to Zhejiang Geely for about $1.5 billion, aims to more than double annual sales to 800,000 cars by 2020. It plans to invest $11 billion over the next five years to tap demand in markets including China.

Volvo may build a North American plant alone or with a partner, Jacoby said. The company is "overall optimistic" about the auto market, the German executive said. "Right now we have no indication of a decline in the market, but if it comes we are more prepared than in 2008, with respect to our financial strength and flexibility in our plants."

Volvo, which employs about 20,000 people globally, has a bigger share of temporary workers today than in 2008, allowing it to respond faster to a potential slowdown, he said.

Volvo is likely to sell more than 400,000 cars this year, and may reach 430,000, up from 373,525 last year, Jacoby said.

[ [ [ [ [ [ [ [ OUR VIEW ] ] ] ] ] ] ] ]

This only makes sense for Volvo from a business standpoint. With their plants already in Belgium, Sweden and China, they are still missing out on a lot of potential profit by making cars in the United States/North America as well.

Considering the quality and safety they are known for, I don't know how something like this would hurt Volvo, save for the unknown direction of the current economic climate.

Your thoughts?