After years fighting for governmental approval, Geely-owned Volvo now faces the tougher challenge of winning over consumers.
Volvo's Li Shufu has big questions to answer Image: Fortune Global Forum |
Even by Chinese standards, Volvo’s three-year application period to produce vehicles within China was a lengthy one. Many analysts feel that the delay has caused billionaire tycoon Li Shufu’s company to miss the boom years of double-digit growth in the auto sector.
Although a new factory paves the way for Volvo’s sales to double to 800,000 units by the end of the decade, the lack of a clear brand identity in China may jeopardise the company’s future. Volvo SUVs are also relatively expensive compared to imported makes.
“If they fail in China, I don’t really see where they can gain volume significantly,” said Liu Huaibin, an analyst at IHS Automotive. The Swedish carmaker posted a loss last year as global sales fell 6.1% to 421, 951.
Li has reiterated his commitment to making Volvo a success in China, promoting its first manufacturing factory in west China’s Chengdu province. Volvo has vowed to bring the same global standards to its Chinese plant.