Volvo Cars, has unveiled a new strategy for China in which production capacity will be increased and China will be developed into a global manufacturing and export hub.

Volvo Cars, the premium car maker, has unveiled a new manufacturing strategy for China in which production capacity will be increased and China will be developed into a global manufacturing and export hub, servicing growing demand for its new range of cars in the US, Europe and Asia Pacific.

Volvo Cars will make its top-of-the-range S90 series cars based on its Scalable Product Architecture (SPA) at its plant in Daqing, Heilongjiang province, in northern China. It also announced today that production of the new S90 premium saloon will in future be moved from Europe to China.

The Swedish company also announced that existing and future 60 series medium-sized SPA-based cars will be built at its plant in Chengdu, Szechuan province, in Western China, while its planned 40 series smaller cars, based on its Compact Modular Architecture (CMA), will be made at a plant that is currently being built in Luqiao, 350 km south of Shanghai.

“With three plants – and the designation of one car line for each plant – Volvo creates an efficient production structure ensuring future capacity for growth,” said Håkan Samuelsson, president and chief executive.

The Luqiao plant, which is owned by Zhejiang Geely Holdings but operated by Volvo Cars, will make Volvo’s new range of smaller 40 series CMA-based cars, as well as CMA-based cars for LYNK & CO, the new car brand launched in October by Geely Auto, highlighting the growing industrial synergies being developed by the automotive group.

Volvo’s expanded production capacity in China forms an integral part of its broader global industrial footprint.

Volvo currently operates two plants in Europe, in Sweden and Belgium. The Sweden plant in Gothenburg will continue to make 90 series and 60 series SPA cars, while its plant in Ghent, Belgium, will in future be a CMA-only production facility making new 40 series cars.

Volvo is also building a new plant in South Carolina in the US that will also make SPA-based vehicles for domestic US consumption and for export.

The details of Volvo’s new manufacturing strategy in China came the same day it unveiled a new China-built version of its S90 saloon and a top-of-the-line, specially upgraded luxury model called S90 Excellence, in advance of their first public appearance at the 2016 Guangzhou Motor Show.

The new S90 will be the most premium car ever made in China. Both versions will be built in Volvo Cars’ production facility in Daqing and exported globally, demonstrating the high levels of quality control that underpin Volvo’s global manufacturing strategy.

All Volvo Cars’ plants adhere to Volvo Cars’ global Volvo Car Manufacturing System (VCMS), utilising and following the company’s global manufacturing and quality standards.

Volvo has paved the way in developing China’s exports of locally made cars to global markets. It was the first Western car maker to export a premium China-made car to the US in 2015 with the S60 Inscription.

The UK has it's best year in a decade for car production, and the export of cars has also grown to record levels.

• UK car manufacturing reaches 10-year high, growing 3.9% to 1,587,677 vehicles.
• More cars exported than ever before, up 2.7% on previous year at 1,227,881.
• Domestic production surges 8.1% to 359,796 to meet increasing demand for British-built cars. 
• EU demand grows 11.3%, with 57.5% of exports destined for the continent.
• US overtakes China as UK’s largest export destination, with demand up by a quarter.

British manufacturers made more cars in 2015 than any year since 2005 when 1,595,697 vehicles were produced, according to figures released today by the Society of Motor Manufacturers and Traders (SMMT). Production increased 3.9% on 2014, with output at 1,587,677 overtaking pre-recession levels for the first time.¹

A record number of cars – representing 77.3% of total production – was for export, with 1,227,881 units leaving the UK, up 2.7% on 2014 levels. Challenges were experienced in some global markets such as China, where demand fell by 37.5%, and Russia, where export volumes declined 69.4%. However, the economic recovery in Europe, the UK’s biggest trading partner, boosted demand for UK-built cars considerably by 11.3% in 2015. The region now accounts for 57.5% of all UK car exports.

Appetite for British-built cars grew significantly in other key and emerging regions, demonstrating the strength and diversity of UK manufacturing and product. In the US, demand rose by more than a quarter (26.5%), making it the UK’s biggest trading destination outside the EU, ahead of China. Meanwhile, notable growth was also seen in Australia, South Korea, Turkey and Japan with volumes up 53.7%, 55.2%, 41.1% and 35.4% respectively.

British consumer and business demand for British-made cars also contributed to last year’s success, with the home car market rising 8.1% on the previous year. One in seven new cars registered in the UK in 2015 was made in Britain.  

Mike Hawes, SMMT Chief Executive, said, “Despite export challenges in some key markets such as Russia and China, foreign demand for British-built cars has been strong, reaching record export levels in the past year. Achieving these hard fought for results is down to vital investment in the sector, world class engineering and a committed and skilled UK workforce – one of the most productive in the world.

“Continued growth in an intensely competitive global marketplace is far from guaranteed, however, and depends heavily on global economic conditions and political stability. Europe is our biggest trading partner and the UK’s membership of the European Union is vital for the automotive sector in order to secure future growth and jobs.”

Chancellor of the Exchequer George Osborne said, “Backing Britain’s car industry has been a priority for this government and today we see the industry going from strength to strength.

“I am hugely encouraged that manufacturing is at a 10-year high and exports ‎are at a record level. All this means jobs and the security of a pay packet for workers and their families.

“Our plans to rebalance the economy mean we have to continue to build on our great manufacturing strengths in the Midlands and the North of England, and work together to ensure that Britain continues to prosper as a global leader in car production.”

The performance of UK automotive is very different compared with UK manufacturing as a whole, according to Office for National Statistics figures, which show  the average manufacturing output to have slowed in recent months.² Eight brand new car models³ were produced in UK plants in 2015, and with £2.5 billion of fresh investment committed to the sector in 2015, more are set to follow in the coming months.

Manufacturing of cars in the UK – by brand

 Notes to editors

1. SMMT Data: 2007 full year car manufacturing total: 1,534,567.
2. ONS Index of Production, November 2015, published 12 January 2016, shows UK manufacturing output fell 1.2% in the 12 months to November 2015.
3. Bentley Bentayga, Infiniti Q30, Jaguar XE, Jaguar XF, Land Rover Discovery Sport, MINI Clubman, McLaren 570S, Vauxhall Astra.