Volvo Cars May Build North American Plant, Chief Jacoby Says

Volvo Car Corp., the Swedish automaker owned by China’s Zhejiang Geely Holding Group Co., may build a plant in North America, Chief Executive Officer Stefan Jacoby said.

“One weakness of Volvo cars is the exposure to the U.S. dollar, so we are investigating increasing our sourcing in North America” to balance currency movements, Jacoby told reporters today at the International Motor Show in Frankfurt. ”The utmost solution would be to have a North American industrial footprint. We haven’t made up our mind.”

Volvo, which makes cars in Sweden and Belgium and is building a factory in China, is likely to decide this year to build a second plant in China, in the city of Daqing, Jacoby said.

Gothenburg, Sweden-based brand Volvo, which Ford Motor Co. (F) sold last year to Zhejiang Geely for about $1.5 billion, aims to more than double annual sales to 800,000 cars by 2020. It plans to invest $11 billion over the next five years to tap demand in markets including China.

Volvo may build a North American plant alone or with a partner, Jacoby said. The company is ”overall optimistic” about the auto market, the German executive said. ”Right now we have no indication of a decline in the market, but if it comes we are more prepared than in 2008, with respect to our financial strength and flexibility in our plants.”

Volvo, which employs about 20,000 people globally, has a bigger share of temporary workers today than in 2008, allowing it to respond faster to a potential slowdown, he said.

Volvo is likely to sell more than 400,000 cars this year, and may reach 430,000, up from 373,525 last year, Jacoby said.

To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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