Volvo Trucks Eyes China Expansion, Local Production to Start Next Year
Yang Haiyan
DATE:  Nov 08 2021
/ SOURCE:  Yicai
Volvo Trucks Eyes China Expansion, Local Production to Start Next Year Volvo Trucks Eyes China Expansion, Local Production to Start Next Year

(Yicai Global) Nov. 8 -- The truck-making arm of Swedish auto manufacturer Volvo is showcasing its flagship FH model at the China International Import Expo in Shanghai, with local production of the model set to start in the country next year.

Volvo Trucks announced on Aug. 23 that it had struck a deal to buy JMC Heavy Duty Vehicle, a subsidiary of Jiangling Motors, for CNY780 million (USD122 million). The deal, which included a production base in the Chinese city of Taiyuan, makes Volvo only the third foreign commercial vehicle maker to set up a wholly owned plant in China.

It was the Swedish company’s biggest investment in China for nearly a decade, Dong Chenrui, president of Volvo Trucks China, said in a recent interview with Yicai Global. Dong also said Volvo Trucks will use a simultaneous release model to introduce the latest vehicles and technology to China as quickly as possible.

The new trucks -- the Volvo FH, the Volvo FM and the Volvo FMX -- will be made in Taiyuan for Chinese customers. Production should start at the end of 2022 and the Gothenburg-based firm expects to have annual output of up to 30,000 trucks, making the factory Volvo Trucks’ fifth-largest manufacturing base in the world.

China is the world's largest commercial vehicle market. Annual sales of heavy trucks in the country reached about 1.62 million last year, surging almost 38 percent from 2019 and accounting for over 37 percent of the global sales of 4.36 million vehicles.

Last year, Volvo Trucks' sales in China jumped 60 percent from 2019. The firm came up with a strategy to build a wholly owned factory in China after the country removed restrictions on the shareholding ratio for foreign investors in commercial vehicle firms.

Local production not only reduces taxes and fees, but also shortens the delivery cycle by 80 percent compared with imports. It also cuts factory and labor costs, and Dong said the company would benefit from the localized supply chain.

Dong added that China is expected to become one of Volvo Trucks' four major global markets alongside Europe, North America, and South America.

Editor: Tom Litting

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Keywords:   Volvo Trucks