WASHINGTON – Volvo may form a captive finance arm in the United States and scale back its product line as part of a push to expand U.S. sales, Volvo CEO Stefan Jacoby said today.
The automaker, acquired last year by China's Zhejiang Geely Holding Group, also may increase supplies of its core models in the United States after the summer, he told Automotive News.
"We're investigating creating a captive finance arm in the U.S.," Jacoby said today in an interview after a Washington conference co-sponsored by Volvo. "We're committed to increasing sales here." He said a decision probably would come by year end.
Jacoby added that the company plans to strengthen its dealer network but didn't provide details. He met with Volvo dealers in Miami this week.
Volvo's U.S. dealership ranks have been trimmed to 315, from 365 in 2008.
Volvo's formation of a captive finance business most likely would involve a joint venture with a bank or other financial services institution, he said. Volvo dealerships now typically obtain financing from U.S. Bank, said Volvo spokesman Dan Johnston.
Tamara Darvish, whose family owns a Volvo dealership in Rockville, Md., said a Volvo captive finance unit would be better than a bank for dealers because the automaker "would have more skin in the game."
"It would work more closely with dealers," she said, adding a captive finance unit could give dealers access to better floorplan financing as well as more competitive new-vehicle loans and leases. "Banks could care less."
Jacoby previously announced plans to increase U.S. sales from 53,948 last year to about 120,000 by 2020. Volvo's U.S. sales are up 26 percent through May to 29,203.
Jacoby also said today that Volvo likely would "trim our product line" in the United States. He declined to provide details but said the company would focus on selling the S60 sedan, the two crossovers, the XC60 and the XC90.
The company previously announced plans to stop selling the V50 and V70 in the United States, Johnston said.
Darvish said Volvo has told dealers it was going to phase out U.S. sales of the S40. Johnston said Volvo hasn't announced plans for the S40.
The company has decided to "increase capacity" of the S60, XC60 and XC90 for sale in the United States after the summer, he said.
Jacoby said Volvo is on track to sell 60,000 to 70,000 vehicles in the United States this year.