Volvo Cars announced this week plans to build an assembly plant here in the U.S. The Chinese-owned company said it will invest $500 million into the project, hoping to stimulates sales while creating more job opportunities for Americans. Car sales have declined over the past decade, due largely in part to the poor job and housing market. Furthermore, Mexico has filled this gap by selling automobiles here in the U.S. at below-market value.
So, where is Volvo planning to build the new assembly factory? Unfortunately, we still don’t know the answer to this question. According to Fortune, however, the company is “in talks” with several states and will announce a location within the upcoming weeks. Some analysts are predicting Volvo will set up the new plant in Arizona, whereas others believe a more plausible location is in the northwest.
While we still don’t know where exactly the plant will be located, Volvo CEO Hakan Samuelsson shared some insight into the project. Samuelsson said the plant will begin production in 2018, focusing on an annual production of 100,000 to 120,000 vehicles, most of which will be the company’s XC90 sport-utility vehicle (SUV).
It’s important to note that Volvo was originally a Swedish-owned company. In 2010, it was purchased by Chinese automaker Greely for an undisclosed amount. Ever since then, the company has struggled to regain its footing in the U.S. market. Financial reports suggest Volvo sold just 54,000 automobiles last year — roughly half the amount of the company’s peak sales year from 2004. The company hopes this new plant will grow the Volvo brand and help stimulate sales in the U.S.
In a recent statement, Volvo CEO Hakan Smauelsson said that Volvo can not be a “true global carmaker” without a presence in the U.S. This is likely the driving reason behind the company’s decision to build an assembly plant here in the states.
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“Volvo Cars cannot claim to be a true global carmaker without an industrial presence in the U.S. Today, we became that,” said Hakan Samuelsson, CEO and president, in a statement. “The U.S. is an absolutely crucial part of our global transformation and today’s announcement makes it perfectly clear that Volvo is in the U.S. to stay.”