Volvo could shift some production to the U.S.

The slide in the U.S. economy is hurting car makers all around the world. As the single biggest car market in the world, any slide in U.S. demand can be a serious problem for the suppliers. Reports are surfacing that Volvo may be one such supplier in trouble. The falling dollar and decreasing demand for Volvo’s products are clouding the manufacturer’s future.

One of the first casualties of the trouble at Volvo may be the factory in Ghent, Belgium, which produces the C30, S40 and V50. Volvo has already shifted V70 production away from Ghent and is looking at moving some production to the U.S., reports Sweden’s Auto Motor & Sport. The combination of the weak dollar and even weaker demand make U.S. production very attractive, and parent company Ford’s U.S. presence would make such a transition relatively easy.

As recently as last summer Volvo had said it would not be producing cars in the U.S., as its European production had ample capacity to meet demand. But the weak - and still falling - U.S. dollar and poor sales of new models like the XC70 and S80 in the U.S. means new focus and attention has to be placed on Volvo’s single most important market. In order to do so profitably, that may mean building cars in the U.S., and shifting production from Ghent, which could ultimately result in the factory’s closure.

If Volvo does make this move, it would take a while to tool-up whichever Ford factory is chosen for its U.S. production. Nevertheless, there is a possibility that the new 2009 XC90, due for a facelift anyway, could be the first Volvo produced in the U.S.