Volvo Car Corp, the Swedish unit of Ford Motor Co, aims to achieve an almost seven-fold increase in annual sales in China and to double its share of the domestic market within the next five or six years.
The goal was revealed by Ong Eng Seong, president of Volvo Car China, in an exclusive interview with China Daily prior to the 11th Shanghai International Auto Show, which opens on Friday.
Volvo hopes its annual sales in China will reach 20,000 cars in the next five or six years, up from nearly 3,000 units last year, Ong said.
He estimated annual sales of premium cars in China will grow from 105,000 to 345,000 units over the period, which means that Volvo's market share will rise from less than 3 per cent to nearly 6 per cent.
"In the longer term, we envisage Volvo's share reaching as high as 15 per cent," he said.
Volvo plans to sell 3,500 cars this year as imports in China, he said.
Its sales in China grew by 25 per cent year-on-year to 1,000 cars in the first quarter of this year.
"This is a significant achievement as it is achieved against other premium competitors that dropped their prices drastically in China while Volvo maintained its stable and rational pricing. Further, the overall car market in China dropped by over 7 per cent in the first quarter," he said.
In January, German premium car maker BMW cut prices of its 3 and 5 Series sedans made at its joint venture in Northeast China's Liaoning Province by as much as 14 per cent, or 100,000 yuan (US$12,100).
Sales of the top 39 car makers in China declined by 7.7 per cent to 574,300 cars from January to March this year from a year earlier, according to industry statistics.
Asked whether Volvo has plans to produce its cars in China, Ong said: "It is a question that we have been actively working on.
"Our competitors have localized or announced plans for localization. But there are many factors to consider for Volvo before a decision on localization can be made, such as the selection of suitable products, place of localization, partners and what our sister brands are doing," he said.
Audi started to produce its sedans in the 1990s at its joint venture in Northeast China's Jilin Province. BMW kicked off production in China in 2003.
Mercedes-Benz plans to make E and C-Class sedans at its joint venture in Beijing later this year.
Volvo is one of four members of Ford Motor's Premium Automotive Group, with British brands Jaguar, Land Rover and Aston Martin.
"We also need to assess whether we are able to achieve economies of scale (of local production) as well as the CKD (completely knocked-down) threshold set by the Chinese Government. Even more important we also need to ensure we can achieve the same quality standard as our imported cars," Ong said.
The CKD threshold, which was implemented on April 1, means that vehicle import tariffs will be imposed on any foreign brand cars produced in China if prices of imported CKD auto kits they use account for 60 per cent or more of the vehicles' price tags.
"We believe there is still a demand for imported products and that many premium models will still be imported, as many Chinese consumers still prefer imported cars and trust in their quality in the premium segment," he said.
Volvo currently sells S40 and S80 sedans and the 2.9-litre XC90 sport utility vehicle in China.
It will launch a 4.4-litre V8 XC90 in China during the one-week Shanghai auto show, which Volvo Car's Chief Executive Officer Hans-Olov Olsson will attend, Ong said.
"Volvo has upgraded the Shanghai auto show to global standard right after the Beijing auto show (last year), which mirrors the importance Volvo attaches to the Chinese market and the role it plays in Volvo's global strategy," Ong said.
Volvo will display a YCC concept car, its debut in China, during the biennial Shanghai auto show.
The company now has more than 40 authorized dealers in China.
(China Daily April 20, 2005)