It's been quite a summer for Volvo Cars.
First, the Swedish automaker showed off its redesigned S60 sedan that will be built exclusively at a new $1.1 billion campus in Berkeley County.
The June 20 unveiling ceremony drew hundreds of business and political leaders — including the head of Volvo, Hakan Samuelsson — as well as media from around the globe to the tiny Pringletown community off Interstate 26 to get a glimpse of the car that will begin full production in September. The plant joins BMW as South Carolina's second full-scale automobile manufacturer.
More recently, Volvo announced its highest U.S. sales total for June since 2006 — more evidence that its re-emergence in America is a success following a period at the start of this decade when the automaker nearly disappeared from the North American market.
Volvo sold 9,868 cars to U.S. consumers in June, a 35 percent increase over the same month last year. Year-to-date, Volvo has sold 47,622 vehicles in the U.S. — almost 40 percent better than the previous year and nearly as many as the company sold in all of 2010.
The most popular vehicle remains the XC90 SUV, which Volvo will start building in Berkeley County in 2021. That car, the first on Volvo's new production platform, accounts for one out of every three sales.
“Volvo has posted double digit growth each month for the first half of the year," points out Anders Gustafsson, who heads up the company's U.S. division.
Gustafsson, Samuelsson and Javier Varela, the company's senior vice president of manufacturing and logistics, met with reporters from media outlets worldwide following the S60 reveal. Some of the questions and answers have been edited for length and clarity.
Q: Considering the growth that you're seeing in the U.S. market and the fact that you announced an expansion at this plant before it had even built its first car, what do you see for Volvo's future in the U.S. in terms of sales and further expansion?
Gustafsson: My target in the U.S. is to have profitable growth. So we start with the S60 and then the Volvo University here in Charleston, where we will educate our technicians from around the country on maintenance and repair of electric vehicles, because we need to prepare for our electrification strategy. We need to repair the cars with efficiency and productivity. So we start with the basics.
Samuelsson: I like that also because what you are saying is that we don't need to invest in more buildings and factories, but we need to invest in our people and teach them how to repair these new cars and teach them about electrification. That's our most important investment in the U.S. going forward.
Gustafsson: Volvo made the decision to put its most profitable car, the XC90, in the U.S. in 2021. So when I talk to colleagues here, I say now is the time that we need to practice and we need to be very, very good. Because when you take the diamond over here, we need to be well prepared.
Q: What else needs to be done to get this plant ready for XC90 production in 2021?
Varela: The paint shop and the main line in assembly are already prepared to cope with this structure. We will need to bring in new operations in the body shop specific to the XC90, expand the body shop, and bring in all the fixtures and special tools for the XC90 in the whole flow of production.
Q: You've had success with partnerships such as the one with Lynk & Co., the automotive brand owned by your parent company Geely Holding Group. Is Volvo looking for partnerships with other big automotive companies?
Samuelsson: Right now we are not seeking any partnerships with other car makers, but we are seeking partners in other areas — technology areas, we need partners for battery capacity, partners for new sensors for autonomous cars, things like that. We have a very open attitude. We know we cannot do everything ourselves. If we can do something better together with somebody, we will look into it.
Q: The S60 is the first Volvo in which you are not offering a diesel engine option. Will you follow this example for other models and, if so, when?
Samuelsson: This car is the first and all cars in the future will follow. No new Volvos will have a diesel alternative, only petrol with hybrid or all electric going forward. But of course we still have the old cars — the V90, the V60 and the S90. They will still have a diesel alternative as long as customers buy them. But we will have no development of new-generation cars with diesel. By 2025, half of our sales will be petrol with hybrid and the other half will be fully electric.
Q: What percentage of suppliers for the Berkeley County plant will be located in North America versus those who will be supplying parts from overseas? Would proposed changes to NAFTA requiring a majority of parts to be made in America impact production?
Varela: Starting out we will have 42 percent of our suppliers in North America, and we are aiming for over 50 percent by next year. With the second vehicle, the XC90, we will increase it further to 70 percent or 75 percent. We need to study what will be the impact, but if the request is more than 50 percent we will have some issues. Some important parts, the engine and transmission, will be coming from abroad.
Q: Is there a sports car in Volvo's future?
Samuelsson: We have created a new company called Polestar which will be building electric cars but very high-performance cars and the first one is a very attractive coupe — 600 horsepower and 150 kilometers (about 93 miles) electric range. It's a very advanced car. But no gasoline sports cars. We are not going to be building those.
Q: What kind of financial benefit did Volvo see in building a plant in South Carolina?
Samuelsson: We can continue to grow faster in the U.S. and we can be closer to our American customers. There's certainly an advantage to being made in the U.S. You can learn more about your customers to be able to really build cars that will be attractive to Americans in the future. That will be easier when we have a team here in South Carolina. It is a very important and necessary step in the further growth of our company.
Gustafsson: It also builds trust with our partners, our retailers. They understand that the investments they are making in their facilities is based on Hakan's promise that we will build a new plant and have a new product portfolio. They can invest in their own facilities because they know we are very much behind the U.S. We've had good people, good owners, but the facilities were absolutely not premium. So now, by 2019, 90 percent of our 300 retailers are going to renovate their facilities. It's a huge investment and for them to get the loans they need and take care of their relationships with their financial partners, they need to show the power of Volvo.
Q: SUVs account for most of Volvo's sales. Do you think SUVs will continue to grow in popularity or do you expect there will be more of a balance between SUVs, sedans and other vehicles among customers.
Samuelsson: SUVs are extremely important and you haven't seen the peak yet. We are very glad to have three very attractive models. We are probably the most SUV intense company in the world. But nothing continues forever and you could argue that there are good reasons not to close down the sedan. One is air drag when the cars will be made electric. It's important for range to have a car that is more streamlined than a big SUV.
Also, when you listen to customers, especially younger ones, they find a smaller more compact car is more attractive. And that's the target group we want to reach with the S60. It's a very dynamic, sporty, smaller sedan.