Azernews.Az

By Bloomberg

Volvo Car Group plans to invest about $500 million to build its first auto factory in the U.S. in a bid to revive sales, which have tumbled over the past decade.

The new plant will start operation in 2018 and produce vehicles built with the same underpinnings as the XC90 sport- utility vehicle, the Gothenburg, Sweden-based company said. A decision on the location and size of the plant will be announced at a later date.

“The U.S. is an absolutely crucial part of our global transformation,” Chief Executive Officer Hakan Samuelsson said in a statement. “Today’s announcement makes it perfectly clear that Volvo is in the U.S. to stay.”

The Swedish carmaker, which was bought by Chinese billionaire Li Shufu’s Zhejiang Geely Holding Group Co. in 2010, is seeking to revive prospects in the U.S., where sales last year totaled about 56,000 vehicles, less than half the brand’s peak in 2004. The plant will give Volvo a local presence, putting it on a similar footing as BMW and Mercedes-Benz. It will also help reduce risks related to currency fluctuations.

Geely is pushing Volvo to become more global and plans to raise output to about 800,000 cars by the end of the decade, up from a record 466,000 deliveries last year. The expansion is part of a five-year, $11 billion investment program that includes overhauling the brand’s product range.

Underpinned by the revamped XC90 SUV, Volvo targets sales this year of about 500,000 cars. The XC90 is the first vehicle developed completely under Geely’s ownership and will serve as the basis of future models.

Volvo Cars has drawn up a shortlist of possible locations in the U.S., where it expects to increase annual sales to 100,000 cars in the medium-term.