* Exports from China to U.S., Russia could start next year -
* Foreign exchange risks key to China export plans -
* Volvo aims to beat China sales target for 2014 - executive
(Recasts, adds analyst quotes, background)
By Norihiko Shirouzu
BEIJING, June 17 Volvo Car Corp's plans to turn
China into an export hub shows parent company Zhejiang Geely
Holding Group Co is out to disprove pessimists who
have cast doubt on Chinese companies' ability to manage global
A senior Volvo executive said the Swedish automaker would
start exporting Chinese-made sedans, a long-wheel-based version
of the S60 called the S60L, to the United States and the XC90
utility crossover to Russia as early as the end of next year.
Volvo is also aiming to beat its 2014 sales target for
China by at least 13 percent as it opens more showrooms in the
world's biggest auto market, according to the executive, who
requested anonymity because he is not authorised to speak with
Geely's strategy for Volvo is being closely watched as a
possible model for other Chinese companies that have had limited
success digesting and managing major consumer brands, following
multi-billion-dollar foreign acquisitions in recent years.
Geely's purchase of Volvo from Ford Motor Co four
years ago surprised many in the auto industry, who doubted that
a relative newcomer could turn around the loss-making
87-year-old Swedish business while protecting its famous brand.
But Yale Zhang, head of Shanghai-based consulting firm
Automotive Foresight, said Volvo's outlook under the ownership
of Geely and its founding chairman Li Shufu now looked
"impressive", as Chinese demand for entry-level luxury cars
"Chairman Li has been so patient with Volvo and it's finally
paying off," he said.
Investors in other Chinese firms that are struggling to
manage foreign consumer brands are intensely interested in how
Li, dubbed the Henry Ford of China, handles Volvo.
Lenovo Group Ltd, for example, had trouble
maintaining market share for years after its 2005 purchase of
IBM's personal computer business, though the company is faring
Another cautionary tale is SAIC Motor Corp,
which bought roughly half of South Korea's Ssangyong Motor Co in
2004 but had to sell its stake after Ssangyong's business
slumped in the wake of the financial crisis of 2008.
Volvo eventually would export about 10,000 S60Ls and a few
thousand XC90s each year from China, the executive said. The
company sold about 62,200 vehicles in the U.S. market last year,
all made in Europe.
Volvo felt it could minimise foreign exchange risks by
adding China as a production base, despite consumer concerns
about the quality of made-in-China products, the executive said.
"The dollar and the yuan have the best relationship, a more
stable relationship than the euro and the dollar," he said.
Volvo aims to use two assembly plants in China to export to
the United States, Russia and possibly other markets such as
One plant in the southwestern city of Chengdu began
producing the S60L sedan late last year, and the second is
ramping up production of the XC90 in the northeastern city of
Volvo global head of media relations David Ibison confirmed
that the company would start exporting from China although he
said the timing and target markets had yet to be decided.
Ibison said that although Volvo's China sales had grown 35
percent year-on-year so far this year, selling 90,000 cars in
2014 could be "a step too far".
The carmaker's focus is to make sure "our growth is
profitable and sustainable," he said from Volvo headquarters in
On the sales front, the senior executive said Volvo sales in
China were likely to jump by almost 50 percent on-year to more
than 90,000 vehicles in 2014, making the country its biggest
market ahead of the United States.
That is well above the 80,000 cars Volvo initially projected
to sell this year. The company sold a total of 427,840 vehicles
globally in 2013, up 1.4 percent from 2012.
"We are satisfied with the progress we've made so far in
China," the executive said.
Volvo's two plants in China should be able to achieve full
capacity of about 250,000 vehicles a year by about 2018, helping
to drive domestic sales, he said.
(Editing by Stephen Coates)