Geely's Volvo unit set to sell China-made cars in the US

Volvo Car Group plans to export a Chinese-made midsize sedan this year to the United States, and is starting to weigh the possibility of building a factory in the US, people familiar with the Chinese-owned carmaker's plans said.

Both moves would be significant for the car industry and Volvo's parent, Zhejiang Geely Holding Group. So far, global carmakers have chosen not to ship vehicles made in China to the US in significant numbers, and efforts by mainland manufacturers to export vehicles to the US have foundered.

Volvo might also export a large "strategic, flagship" sedan based on a newly developed underpinning technology, said the executives, who work for Zhejiang Geely. That car would be shipped out of the mainland in addition to the Volvo S60L, a long wheelbase version of the S60 sedan Volvo began producing in the southwestern city of Chengdu more than a year ago.

The moves are aimed at reviving Volvo's momentum in the US, where volume last year fell 8 per cent from 2013 to 56,371 vehicles. The US, which has long been Volvo's largest market, was replaced by China last year. Mainland customers bought 81,221 Volvos in 2014, up 33 per cent.

More broadly, the moves are part of Geely's turnaround strategy for Volvo which has struggled to go beyond being a brand with an annual volume of less than a half-million vehicles.

Exporting Chinese-produced mainstream passenger cars to the US and other advanced markets has been a long-standing goal of the mainland's indigenous carmakers - an objective that has largely eluded the industry to date.

"It would be a big breakthrough" not just for Geely, but for China's auto industry, said James Chao, Asia-Pacific director of consulting and research firm IHS Automotive.

"Volvo is not an indigenous Chinese brand, but it is wholly Chinese-owned. Perhaps this is the model or strategy that finally works for Chinese companies trying to enter the US market and other markets."

Chao added Volvo's owner, Geely, could follow Volvo into the US with its own products, perhaps leveraging Volvo's manufacturing and parts supply chains.

Geely's purchase of Volvo from Ford five years ago surprised many in the industry, who doubted it could turn around the business while protecting its famous brand.

The S60L was developed originally as a China-specific model to cater to wealthy mainlanders who prefer cars with bigger, comfortable rear seats because many of these owners have chauffeurs. Volvo expects to ship roughly 1,500 made-in-China S60L cars to the US this year, compared with the car's projected volume in China of 26,000 units.

Volvo announced in late 2013 that it would produce "a large premium sedan" at a new plant in Daqing , Heilongjiang province.