Volvo’s New CEO Sees Opportunity in Chinese Market

During a press conference on Wednesday, Volvo’s new CEO Stefan Jacoby said the company may seek partnerships with rival automaker to gain economies of scale in order to be competitive.

The former CEO of Volkswagen North America was chosen by Volvo’s new owner, Zhejiang Geely Holding Group Company, to head up the company earlier this summer. Geely’s acquisition of the Swedish brand form Ford Motor Company was finalized earlier this month for a reported $1.3 billion in cash.

Jacoby said he will work to “further sharpen” the automaker’s position and will seek new opportunities within the Chinese market. “We will be upscale but will not just copy rivals such as BMW. Volvo stands for safety, solidity and reliability but the emotional positioning of the brand is not sharp enough. Volvo needs to find a Swedish-based, unique positioning.”

Jacoby is no stranger to Asia, having held a variety of positions in the market during his lengthy career with Volkswagen AG. He said China, which emerged as the world’s largest auto market earlier this year, offers some significant opportunities for Volvo.

Geely has said that it plans to increase Volvo’s annual global production by nearly double. The new parent company intends to build new production facilities in China to support its domestic market and will also maintain its current European operations. To support those goals, Geely has said it will invest up to $900 million in its new acquisition.

Jacoby said Volvo’s relatively small size can work to its advantage but that it will need to build strategic alliances in order to compete against larger rivals’ economies of scale. “There are opportunities to cooperate with suppliers,” he said, “with maybe other competitors as well, but also, of course, to find synergies with our sister company Geely in the future.”

Some analysts have questioned Volvo’s ability to handle the high cost of developing new products needed to become competitive in today’s rapidly-changing marketplace.

Last year, Volvo saw its total global sales fall to 334,808 units. For 2009, the automaker posted pretax losses of $653 million but posted profits during its last two quarters under Ford’s ownership.

In his first interview since taking the reins at Volvo, Jacoby told reporters he was first contacted by Geely in June. He said he had enjoyed his long-standing relationship with Volkswagen and that he was “surprised to be offered the job.” In the end, he said it was Geely chairman Li Shufu’s aggressive and ambitious plans for the company that convinced him to accept the offer.

Under Ford’s ownership, Stephen Odell had served as Volvo’s CEO. Odell now serves as chairman and CEO of Ford Motor Company’s European division.

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