Why Volvo is bringing Chinese cars to America

If you’re a global automaker, how do you demonstrate your fealty to important markets? You build a local factory.
Volvo is doing that here in America with its announcement to build a factory in South Carolina. The core purpose of plants like these is to combat the vagaries of the global currency markets. Owning a local factory means that profits don’t tilt on favorable exchange rates. But these shops also support local manufacturing, suppliers, and workers. And traffic in good faith.

This is all part of Volvo’s drive to become a global automaker, instead of a European niche brand. Wholly owned by Chinese carmaker
Geely since 2010, the Swedish oddballs are capitalizing on their advantages in what senior vice president of Volvo Cars
China, Lars Danielson, calls their «second home market,» where the brand enjoys capabilities not available to other joint operating ventures between local and global manufacturers. These include the ability to export about 5,000 Chinese-made vehicles – which will soon find themselves aboard shipping containers destined for the United States.

Volvos began rolling off the line in China’s rapidly industrializing «Southwest Cluster» in Sichuan just over a year ago. With thousands of young workers (average age: 24) toiling in two daily 10-hour shifts, this Asian plant built 50,000 cars in 2014. It is expected to produce around 80,000 this year, more than enough to make China the brand’s second largest market.

The entire American-bound allotment will consist of the S60L, a Chinese market special version that adds
generous heaps of chrome trim and over three inches of rear legroom to the midsize sedan. (Given the traffic, the affordability of chauffeurs, and the status that being driven conveys, the Chinese have a higher rate of what they call «rear seat consumers» than anywhere else. The extra room is for them. But Americans like it too.) The lengthening is noticeable mainly for the way it complements the car’s tightly arched design, giving it a less tense and more complete profile. But the key aspect of this vehicle is that it will be the first fully federalized car to be imported to America from China.

This may be part of an effort to enhance Volvo’s credibility in the Chinese market. See if you can follow the logic. The brand just unveiled two additional Chinese market iterations of the new
XC90 at the
Shanghai Auto Show: the Excellence and the Lounge Concept. Both are crafted with exquisite yet honest materials. And both feature heavy doses of special amenities in back – additional leg room, abundant flat screens, champagne coolers and crystal flutes, redundant controls, glass partitions, and aniline leathers. In the case of the Lounge, there is even a jewelry box and shoe caddy.

As Volvo attempts to move upscale, particularly in China, it must maintain its status as a luxury brand elsewhere, especially in the United States. «To be successful in China as a premium brand,» Danielson says, «you need to be recognized in China as a global premium brand. Affluent Chinese consumers travel a lot, and are very aware of what brands mean.»

So in order to sell products designed specifically for China, Volvo must maintain, or even increase, its presence and prominence in its western markets. Danielson said that American
dealers were very excited about the importation of the S60L. But it seems plausible that importing this Chinese-market special has at least something to do with validating Chinese notions of luxury in America, in order to enhance Volvo’s standing as a luxury carmaker in China.

Is that a tautology? Yes, sort of. But that’s state-run capitalism in the global age. The earth’s production chains may be flattening out, but the world is still round.

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