Volvo will double the size of its plant in Charleston

Volvo Cars, the premium carmaker will build the next generation of the XC90 large premium SUV will be built in its new manufacturing plant in Charleston, South Carolina from 2021. This takes Volvo Cars’ total investment in its US manufacturing operations to over USD 1.1 billion and will raise the total of new jobs created at the Charleston site to nearly 4,000.

The South Carolina plant will start production of the next generation S60 in the fall of 2018. The addition of the next generation XC90 from 2021 as well as a planned new office campus will create 1,900 new jobs, which come on top of the 2,000 new employees currently being hired.

“The continued expansion of our plant in South Carolina is another significant commitment to the US market,” said Håkan Samuelsson, president and chief executive. “The plant in Charleston will serve both the US and international markets and forms a strong foundation for our future growth in the U.S. and globally.”

The expansion will bring the total cost of the Charleston complex to $1.1 billion, about $520 million more than was originally announced. And it will now employ nearly 4,000 hourly and salaried workers.

The expansion “underscores our commitment to the United States,” said Lex Kerssemakers, who served as CEO of Volvo Cars North America until Sept. 15. He is now heading European operations.

The South Carolina plant is one of three that have been added to Volvo’s global manufacturing footprint since the Swedish carmaker was purchased from Ford Motor Co. by China’s Zhejiang Geely Holding Group in 2010. The other two are in China.

They are proving critical to Volvo’s rapid growth, the automaker setting three consecutive annual sales records and on target for a fourth this year. Last year, it saw an increase of 6.2%, volume jumping to 534,332. It is targeting 800,000 by the end of the decade.

Volvo will double the size of its plant in Charleston, South Carolina, to build the XC90.

The XC90 has been crucial for Volvo’s growth in the United States. The U.S. is the single-largest market for the XC90, noted Kerssemakers, reflecting the dramatic shift from sedans and coupes to the SUVs, CUVs, vans and pickups that now account for nearly two-thirds of overall new vehicle sales.

Demand for the XC90 has been so strong worldwide that Volvo has been struggling with supply shortages. As a result, the brand’s overall sales in the American market actually dipped 7% for the first eight months of 2017, though they increased 4.1% in August.

The Charleston plant – which will grow to a capacity of 150,000 vehicles annually when the expansion is completed – will serve as the sole worldwide source for the S60 sedan. It will be one of at least two production sources for the next-generation XC90, and will service both the U.S. and other markets, Volvo officials said.

Volvo has already replaced the six and eight-cylinder engines that normally defined vehicles in the luxury segment. They use an “all-four” strategy. That includes its most sporty T8 Twin Engine, a plug-in hybrid making 400 horsepower.

With all new models introduced in 2018 and beyond, Volvo announced in June, it will only use “electrified” powertrains. These include not only plug-ins like the T8 but all-electric models and those using more conventional hybrid drivetrains. Kerssemakers has stated to the media that a majority of the “electrified” vehicles will be hybrids.

The originally planned portion of the new Volvo plant will open just outside of Charleston late next year. It is scheduled to employ 2,000, with another 1,910 jobs to be added when the second phase goes into operation by 2021.

Volvo Cars announced in May 2015 that its first ever manufacturing plant in the United States would be located just outside Charleston in South Carolina. The decision to choose South Carolina was taken as a result of its easy access to international ports and infrastructure, a well-trained labour force, an attractive investment environment and experience in the high tech manufacturing sector. 

The business logic behind the decision to build the next generation XC90 in South Carolina is compelling. The U.S. is the largest single market for the XC90, although a considerable amount of XC90 volume will be exported from the Port of Charleston. Total U.S. production capacity at the plant will rise to 150,000 vehicles annually.

The XC90 has played an important role in Volvo Cars’ sales revival in the United States and around the globe. The widely acclaimed large SUV, launched in 2014, is the most awarded luxury SUV of the century and helped Volvo Cars recover its sales in the United States from a low of 56,000 units sold in 2014 to almost 83,000 units in 2016.

Their announcement on further expansion in South Carolina allows Volvo Cars to take another step toward the company’s ‘build where you sell’ global manufacturing strategy. It currently operates two manufacturing plants in Europe, as well as two factories in China. A third Chinese plant is currently under construction.

In addition to expanding the manufacturing plant Volvo Cars will further develop its neighboring office campus at the Charleston site. A new office building will be constructed to house up to 300 staff from R&D, purchasing, quality as well as Volvo’s Southern Regional Sales team.

“We’re excited to add a second car to our first American factory and we continue to be impressed by the entrepreneurial spirit in South Carolina,” said Lex Kerssemakers, President and CEO of Volvo Car USA. “Our business in the U.S. has been undergoing a transformation over the past two years and this is an important next step for our development here.”

PRESS AND MEDIA RELEASES FROM VOLVO AND OTHERS USED FOR THIS ARTICLE. 

BRUCE HUBBARD

BRADLEY HUBBARD

BONNIE LYNCH

AUTO ADVISOR GROUP