CHINA / National
Volvo to sell China-made luxury cars
(International Herald Tribune)
Updated: 2006-03-20 21:50
The Swedish carmaker Volvo said Monday that it would start selling
locally made S40 luxury sedans in China.
Ford Motor's joint venture in China will produce 10,000 units of the S40
sedans a year from Changan Ford's plant in the western city of Chongqing,
said Frederik Arp, president and chief executive of Volvo Cars.
Volvo will start selling the S40 sedan this summer, which is from June to
August in China.
"Local production is the key to remain competitive in China," Arp said at
a press conference. The company is facing a situation where its "main
competitors are already producing their volume models locally."
Rising incomes in China have generated an increasing number of buyers for
premium cars. Car sales in China rose 21 percent in 2005 to 3.97 million
units and could grow 17 percent this year, according to the China
Association of Automobile Manufacturers.
So far, Volvo has imported cars into China. Last year, it sold 4,786
units, an 84 percent increase over 2004. Sales of the S40 accounted for
nearly a third of the total.
Bayerische Motoren Werke said sales of cars made in China rose 77 percent
to 15,300 units last year, compared with a 9.9 percent sales gain
worldwide. BMW, which set up its China venture in 2003, makes five models
at its venture in the northeastern city of Shenyang.
DaimlerChrysler's venture in China, which started to sell locally made
Benz sedans in December, increased sales of imported Benz cars by 39
percent to 16,128 units last year. The company is making two E-class
models at its venture in Beijing. Chrysler Group plans to start making
300C sedans this year.
The decision to start local manufacturing was made because of "the
significant growth of the overall market combined with the fact that the
lion's share of the growth is happening from local manufacturers," Arp
said. "So being an importer only is not necessarily a long term success
situation."
Depending on the demand, the output for the S40 from the Chongqing plant
may rise, Arp said, without giving details. The sedan accounted for
nearly a fifth of Volvo's global sales last year.
"It's a great advantage not to have to invest in all the facilities in a
joint venture," Per Norinder, Volvo Cars' general manager in China said.
"Changan Ford already has a factory up and running."
A locally made Honda Civic
Honda Motor plans to sell locally made Civic compact cars in China.
The company, which produces the Civic in 12 countries, said it planned to
sell 50,000 Civic units in China this year.
"Civic is more important for Honda in China than its other models like
Accord, as the popular compact car model is more attractive to consumers
with its cheaper price and fuel efficiency," said Yale Zhang, an analyst
with CSM Asia in Shanghai.
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