RIDGEVILLE, S.C. — Volvo Cars' new U.S. auto plant is only partially staffed, its assembly lines barely stirring. But don't let the calm fool you: The clock is ticking on an ambitious plan to make the plant the exclusive global source of Volvo's most profitable nameplate — the XC90 luxury crossover — in only 36 months.
It is a show of confidence from the once-beleaguered Swedish automaker in its first U.S. factory, an investment of $1.1 billion. Volvo is targeting rapid world-class status in South Carolina using an untested work force, a new U.S. manufacturing team and a fledgling North American supply chain.
But Volvo is following the well-worn path of European automakers BMW and Mercedes-Benz, both of which turned untried U.S. plant startups into global export machines.
Sole-sourcing a global flagship "increases the stakes quite a bit," noted Bernard Swiecki, senior automotive analyst with the Center for Automotive Research.
"You've got an all-eggs-in-one-basket situation," he said.
Volvo S60 sedan
The new S60 is the first Volvo car made in the U.S.- Pricing: Starts at $36,795, including shipping
- Trim levels: Momentum, R-Design and Inscription
- Production: Begins late August
The plant, 45 miles northwest of Charleston, will begin ramping up production of the redesigned S60 sedan in late August. But in three years, a new-generation XC90 will be added to the mix.
The seven-seat crossover will be built on the second iteration of Volvo's Scalable Product Architecture platform. SPA 2, as it's known, eventually will bring Level 4 autonomous driving capability and other safety and convenience features to Volvo vehicles.
Volvo's decision to consolidate global production of its flagship XC90 in an unproven factory is less about chutzpah and more about market realities.
"The U.S. is the biggest market for the XC90, so it's natural to start there," Volvo Cars CEO Hakan Samuelsson told Automotive News last week at an event celebrating the plant's opening. And, he added: "We need a second car for the factory."
The XC90 accounts for just over a third of Volvo's U.S. sales. Through May, Volvo sold 12,745 XC90s in the U.S., up 37 percent from the year-earlier period.
"It's better to build where you sell the majority of the volume," Volvo Cars of North America CEO Anders Gustafsson echoed.
Volvo is on pace this year to sell 600,000 vehicles globally for the first time in its 91-year history, helped by strong demand in the U.S., where sales surged more than 40 percent for the first five months of this year, to 37,754.
