Volvo concedes that to be a success in North America it will need a local manufacturing base.

Having witnessed the success of premium European marques such as BMW and Mercedes-Benz building cars in the U.S., as well as Volkswagen and soon Audi ramping up their manufacturing bases in North America, Volvo has admitted that it too will need to move some production to North America if it hopes to expand sales.  

However, despite the financial backing of Chinese parent Geely, Volvo would still need an alliance partner to build cars in North America, according to its CEO Stefan Jacoby.

“In the medium term, five to six years, we need to find a proper solution in North America,” Jacoby told Bloomberg during a recent interview. “Building a plant ourselves is maybe more unlikely. I’m looking for a partner that could help us utilize a North American plant.”

Jacoby, who oversaw the launch of Volkswagen’s U.S. plant in Chattanooga, TN during his previous role as the chief of the German automaker’s U.S. division, also revealed that Volvo was already in talks with several potential partners, one of which is Fiat-Chrysler.

Stefan Jacoby

Stefan Jacoby

Jacoby has previously stated that Volvo was open to forming alliance with a rival firm to help share costs for the development of a new-generation of small cars and engines.

Ideally, this rival firm would also be its partner for its North American production, which once again makes Fiat-Chrysler an ideal choice due to its wide array of small cars sold under the Fiat label.

Volvo, which hopes to double its global sales to around 800,000 units by 2020, is currently losing money in the North American market despite making a profit in Europe. The Swedish automaker’s vehicles don’t command the same kind of margins that its rivals from Germany enjoy so importing cars from Europe is proving a tough business.

This is especially true for cheaper models, which is one of the reasons why Volvo won’t be introducing the recently revealed V40. A crossover version of the V40, labeled the XC40, is expected though.