Volvo Planning to Invest $11 Billion in Five Years

Volvo Cars, the Swedish carmaker, plans to invest as much as $11 billion worldwide over the next five years, hoping for increased sales in the ever-rising Chinese market, according to Bloomberg. The company is also eyeing government customers and is currently considering making cars in China for export, Chief Executive Officer Stefan Jacoby said today.

“It is obvious that at some point manufacturers will export from China. We, as a global premium brand with European heritage, have a very good opportunity to be owned by a Chinese enterprise and to utilize our manufacturing capacities here,” Jacoby said.

Major automotive manufacturers like Volvo, Audi and Daimler AG are eager to expand their business in China, which has become the world’s biggest automotive market and is also the second-largest economy. Jacoby presented his strategy today in Beijing alongside Geely Chairman Li Shufu. The CEO is hoping China will help double sales to 800,000 vehicles annually in 10 years’ time.

“There is no doubt about the super importance of the Chinese market to Volvo. The vital question lies with whether Volvo would be able to avoid any discounts in its brand’s premium value because of the takeover by a Chinese homegrown carmaker,” said Yu Bing, an analyst with Pingan Securities Co. in Shenzhen.

Volvo expects to sell 200,000 cars in China by 2015, up from 30,522 in 2010, Jacoby announced today. As part of the company’s new plan, its dealer network in the Asian country will more than double to 220 locations by 2015 from the current 106.

“Being owned by a Chinese enterprise offers us additional opportunities in getting into the government fleet business,” Jacoby added.