Volvo Invests $500M in First U.S. Factory to Increase Sales

Mar 30, 2015 10:53 AM EDT | Matt Mercuro

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Volvo Car Group will invest nearly $500 million in its first auto factory in the U.S. in an attempt to increases sales, which have dropped over the last decade, according to a company release.

The Swedish automaker is in discussion with a number of U.S. states currently and will announce the location of its new facility within the next couple of weeks.

The move is big for a number of reasons. It means Volvo is now a global automaker with a footprint in all three important continents, including two in Europe and two in China. Production on the future plant will begin in 2018.

Volvo has increased its investment in production and new vehicles since being sold to Zhejang Geely by Ford in 2010.

The new plan involves creating new modular vehicle technology, a new design language and range of connectivity services and safety features.

"Volvo Cars cannot claim to be a true global car maker without an industrial presence in the US. Today, we became that," said Hakan Samuelsson, Chief Executive and President, in a company statement. "The US is an absolutely crucial part of our global transformation and today's announcement makes it perfectly clear that Volvo is in the US to stay."

The automaker is hoping the new plant will allow it to return to annual sales of 100,000 vehicles. Though Volvo sales increased 9 percent in 2014 to about 466,000, sales fell 8 percent to 56,000 models in the U.S.

Possible plant sites have not been announced yet by Volvo.

"The US Volvo dealers are delighted with this announcement," said Chip Gengras, chairman of the Volvo dealer council in the U.S., according to a company statement. "It clearly illustrates Volvo's long term commitment to the US market."

The company did confirm that production capacity will be close to the 120,000 vehicles made at its larger Chinese plant.

Make sure to check back with AutoWorldNews for the latest Volvo plant updates and follow us on Facebook and Twitter.

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