LOS ANGELES – “If we play our cards right,” Volvo Car Corp. should be able to double its global sales to 800,000 vehicles by 2020, President and CEO Stefan Jacoby says in a keynote speech today kicking off the auto show here.
“In the next six months, we will put together the growth strategy that will take us there,” adds Jacoby, who joined Volvo in August after three years as president and CEO of Volkswagen of America Inc.
By the end of this year, the Chinese-owned Swedish auto maker also will announce which Volvo vehicles it intends to manufacture and sell in China. The car company has been active in China since 1994, where its sales are up 50% compared with year-ago.
Volvo currently has a limited manufacturing footprint in the world’s fastest-growing automotive market, but will blossom by virtue of Zhejiang Geely Holding Group Co. Ltd.’s purchase of the brand from Ford Motor Co. in August.
Jacoby says Volvo and Geely must “look for smart solutions” in order to be competitive in the U.S., where it has no manufacturing capacity. That means developing “horizontal” vehicle architectures both Geely and Volvo can use, which will include a wide range of similar modules and components.
“And, of course, we are looking for joint collaborations with our sister-company Geely, especially where the Chinese have advantages,” Jacoby says. “We will have access to the supply base Geely has in China.”
Those shared opportunities could extend to jointly developed electric vehicles, he says.
However, Jacoby admits the issue of profitability in the U.S. market keeps him up at night, partly because currency fluctuations are out of his control. Even domestic production is no guaranteed remedy.
“I think it takes a lot more thought in how to conquer and how to have proper position and share in this market than to just say we will have local manufacturing,” he says. “Right now, we prioritize our thoughts of extending overseas production to China, but it does not mean we are not working on a U.S. strategy.”
Asked after his speech whether he worries about Volvo’s intellectual property being compromised through its relationship with Geely, Jacoby downplays such concerns, even though many part suppliers tell stories of violations in China.
“The relationship has been clearly defined, and I see no reason to be concerned in that area with regard to Volvo and Geely,” he says.
Jacoby also deflects a question about Chinese quality and how he will attempt to keep the Volvo brand immune. “We are very aware of what Volvo stands for: Scandinavian design, solid quality, reliability and safety. We would be stupid if we would give up these values.”
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On the product front, Jacoby is excited about Volvo’s new C30 DRIVe Electric, displayed at the recent Paris auto show and bound for a test fleet in California next year. Lithium-ion batteries produced in the U.S. provide a range of 93 miles (150 km).
“We are gaining experience with this,” Jacoby says of the EV. “It is necessary to start now. It will take quite a lot of time until we see a significant share of EVs in the market, but we have to work on this technology right now to gain experience.”
Likewise, he says Volvo will continue developing a new generation of internal-combustion engines, with the first coming to market in 2013. In that timeframe, he says Volvo will be able to fulfill diesel emissions standards in the U.S.
“I think there’s a good chance to further increase the share of diesel technology in this market,” he says.
Jacoby attempts to ease fears Volvo’s identity will be lost because of Geely’s takeover. “There’s nothing to be worried about. It’s a normal process. This will be for the good of Volvo.”
“Yes, we are owned by a private Chinese entrepreneur,” he adds. “And I think we need to get used to this. China is an integral part of the global economy. We produce in China; we export from China; so we have to also respect the Chinese investors investing their monies in overseas enterprises.”
Volvo needed a new partner to grow the business and Jacoby admits the Swedish auto maker was vulnerable.
“It is actually not that the big ones are eating the small ones,” Jacoby says of the Geely-Volvo deal. “It’s that the fast ones are eating the slow ones.”
