March 21, 2014 / 5:05 AM / 4 years ago

UPDATE 2-Volvo sees growth for all main car markets in 2014

* Sees growth outlook favourable in all main markets

* Repeats will grow sales by 5 pct in 2014

* Says will take years to rebuild U.S. market position

* FY2013 operating profit 1.92 bln SEK vs year-ago 66 mln (Adds quotes)

By Niklas Pollard and Johannes Hellstrom

STOCKHOLM, March 21 (Reuters) - With cost cutting boosting profits last year, Swedish car firm Volvo is looking forward to all its main markets growing in 2014, especially in Chinese owner Zhejiang Geely Holding Group’s home market, it said on Friday.

The company, one of Sweden’s biggest by sales and number of employees, is banking on strong sales of increasingly locally-made Volvos in China to reach a target of roughly doubling sales by 2020 and securing its future in a cut-throat car industry.

“We for the first time in many years have positive outlooks really for all our main market blocks,” Chief Executive Hakan Samuelsson said, pointing to growth in China and the United States and a long-awaited if modest pick-up in European markets.

The Gothenburg-based company earlier reported operating profits last year rose to 1.92 billion Swedish crowns ($302 million) from 66 million in 2012 when one-off gains from the sale of technology to its Geely helped keep the carmaker in the black.

The sharp rise in earnings came despite Volvo having posted a 577 million loss in the first half and full-year revenue slipping to 122.25 billion crowns from 124.55 billion in 2012.

Volvo, bought by China’s Zhejiang Geely Holding Group Co. from Ford Motor Co. in 2010, stood by a forecast to remain in the black this year and grow sales by “a good” 5 percent from the 427,840 cars sold in 2013.

China has become a bright spot for Volvo as it seeks to take on larger global luxury brands such as BMW, Daimler’s Mercedes and Volkswagen’s Audi and generate volumes sufficient to foot the bill for billions dollars of investment in new vehicles.

Volvo’s sales in China shot up nearly 50 percent last year, leaving it the group’s top market alongside the United States, and it expects new models and a further expansion of its dealer network in the world’s biggest car market to underpin growth.


But while turnover in China has taken off, a lack of new models has left Volvo unable to take advantage of a growing total U.S. market with sales there sliding 10 percent last year to 61,233 cars, roughly half of what they were a decade ago.

Acknowledging disappointment with its performance Volvo has replaced top management in North America and hopes that a sprucing up of existing models and a launch of its V60 sports wagon will revive sales in the fiercely competitive U.S. market.

Samuelsson said a stronger model line-up, which will eventually include a new XC90 SUV, and a doubling in its marketing spend would go some way towards enthusing dealers and showing its commitment to the U.S. market.

“We need to get back above 100,000 (cars) as soon as possible to be relevant as a brand and for the dealers,” he told Reuters on the sidelines of the briefing.

“But that probably requires that the new XC90 is on board and helping us. So we will probably have to wait a couple of years, until 2016, before we manage that.”

Volvo has for decades been hampered by periodically strong currency headwinds in times of dollar weakness against the euro and Swedish crown as it ships all cars sold in the United States from its factories in Europe.

With the focus squarely on China, local U.S. production looks distant but Samuelsson said the group was eyeing “concrete opportunities” to eventually ship Chinese-made Volvos to the United States due to the yuan being more closely linked to the dollar than currencies in Europe.

“Instead of crossing the Atlantic we can cross the Pacific Ocean. Toyota and Kia have moved a lot of cars across that ocean over the years,” he told Reuters. (Editing by Alistair Scrutton and Greg Mahlich)

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