Volvo Expected to Lead Ford Premium Automotive Group Sales in China

Volvo Car, the Swedish unit of Ford Motor Co, said it expects to head Ford's Premium Automotive Group (PAG) in the Chinese car market. However Volvo is not quickly moving to manufacture within China in the near term.

"Volvo will act as an "engine" for Ford PAG, and will pave the way for its other brands' sales in China," said Ong Eng Seong, president of PAG's China operations. Besides Volvo, PAG includes the British luxury brands Land Rover, Jaguar and Aston Martin. "All of these brands will be marketed in China through the networks being built by Volvo," Ong said. Volvo, Land Rover and Jaguar have been launched in China as imports. Aston Martin will be exported to China next year, he said.

"However, Volvo has no production plans in China so far because our sales volume in the nation remains small and we are focusing on brand image instead of volume now," Ong said in an interview with the China Daily. "We have not submitted any applications for local production to Chinese regulators," he said. The announcement counters recent hints that the company would produce the Volvo S40 sedan in China soon.

In June, Volvo's CEO Hans-Olov Olsson told China Daily the company will consider production in China when its sales reach 10,000 vehicles in China a year. Volvo is currently forecasted to sell 3,000 vehicles in China this year, up from 2,500 units last year, Ong said.

Volvo currently offers the S80 sedans and XC90 sport utility vehicles in China. "Volvo will start to export the newly-developed S40 T5 sedan to China at the beginning of next month," Ong said. Adding that, "Our sales in China will grow rapidly next year with the introduction of the Volvo S40 T5."

The 2.5-litre S40 T5 is expected to compete with the BMW 3 Series and Mercedes-Benz C Class sedans. BMW started to produce 3 and 5 Series sedans in a joint venture with China Brilliance Auto in Northeast China's Liaoning Province in late 2003. Mercedes-Benz will manufacture the C and E Class sedans in its parent DaimlerChrysler's joint venture with Beijing Automotive Holding Corp beginning next July.

"Prices of imported premium cars are likely to rise, not decline, next year thanks to a increasingly strong euro and mounting raw material prices, although China will continue to cut its tariffs on vehicle imports," Ong said.