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Volvo to open first-ever U.S. assembly plant

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Core Tip:DETROIT — Volvo Cars is planning to build its first-ever U.S. assembly plant as part of a push to increase sale

DETROIT — Volvo Cars is planning to build its first-ever U.S. assembly plant as part of a push to increase sales here.

Volvo to open first-ever U.S. assembly plant

Pre-production of the all-new Volvo XC90 in Torslanda (Photo: Volvo).

The $500 million plant will be Volvos first car plant in North America.

The Swedish automaker says it has a short list of possible locations but didnt reveal them Monday. The company is expected to announce the location in the next few months.

Volvo has been owned by Chinese automaker Geely Holding since 2010. It currently has two plants in Europe and two in China.

Volvo CEO Hakan Samuelsson said the decision to open a U.S. plant highlights the companys long-term commitment to the U.S. market.

Volvo Cars cannot claim to be a true global car maker without an industrial presence in the U.S., Samuelsson said in a statement.

Volvo has sold cars in the U.S. since 1955, but the brand struggled after its sale to Ford Motor Co. in 1999. Its products got old and couldnt compete with newer rivals from Audi and others. Geely bought Volvo from Ford for $1.8 billion, a fraction of the $6.4 billion Ford had paid to acquire it.

Now, the automaker is hoping new vehicles—including the upcoming XC90 SUV, which goes on sale this summer—and a bigger manufacturing footprint will help it double its U.S. sales to 100,000 over the next few years.

Swedens Volvo Group—the former parent of Volvo Cars—already has a manufacturing presence in the U.S. It makes trucks at a plant in Dublin, Virginia, and engines in Hagerstown, Maryland. It also has a U.S. headquarters in North Carolina. But Volvos car division was separated from that business when it was bought by Ford.

Mike Jackson, the head of North American vehicle forecasting for the consulting firm IHS Automotive, said automakers generally want to build cars in the places wher they sell them as a hedge against currency fluctuations. Mercedes, BMW and Acura are among the other foreign luxury brands that build vehicles in the U.S.

Although Geely owns Volvo, Jackson doubts the plant will be used to build Geely-branded cars for the U.S. Safety and quality issues delayed Geelys planned entry into the U.S. market in the mid-2000s. More recently, Geely has struggled in China, wher many customers prefer foreign brands.

A Volvo plant would produce Volvo products, Jackson said.

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