Volvo XC90 production in Gothenburg, SwedenEnlarge Photo
Volvo has confirmed plans for a new vehicle assembly plant just outside of Charleston, South Carolina. The Swedish automaker, whose parent company is Chinese firm Geely, is committed to spending up to $500 million to establish the new plant, which is scheduled to come online in 2018 and initially produce up to 100,000 vehicles per year.
The latest decision is part of Volvo’s long-term strategy for the U.S., which was once the automaker’s most significant market. Last year the U.S. accounted for just 12 percent of Volvo’s sales, or about 56,366 units. Volvo’s medium term target is 100,000 sales in the U.S. annually, which was roughly its number of sales back in 2007.
South Carolina is also home to BMW’s U.S. plant and soon Mercedes-Benz will start building its next-generation Sprinter van in the state. Volvo says it picked the state because of the existing infrastructure and manufacturing base as well as the easy access to international ports that it offers. The latter point is crucial as the plant will build vehicles for both export and local consumption.
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Once online, Volvo estimates the plant will employ up to 2,000 people over the next decade and up to 4,000 people in the longer term. Furthermore, the addition of the plant will see Volvo manufacture vehicles on three continents, helping to hedge against currency fluctuations as well as underscore Volvo’s position as a truly global automaker (Volvo already operates two plants in Europe and two in China).
There’s been no mention of what models will be built at the plant but it’s likely we’ll see more SUV models built there, such as the XC90 or the next-generation XC60, since these are still the most popular segments in the U.S. And with Volvo’s future models set to feature common platforms, it’s possible we’ll see more than one model produced at the plant.