Swedish car maker Volvo said it was on track with the plan to boost sales more than four-fold in China, after it reported a fall in last year’s earnings because of costs related to its expansion.
In 2010 Volvo was bought by Zhejiang Geely Holding Group from Ford Motor and now it plans to boost its output from 400, 000 units to more than 800, 000 units in the next 8 years. Volvo reported a fall in 2011 operating earnings to 1.6 billion Swedish crowns ($237.8 million) from 2.3 billion crowns the previous year. In 2011 the company sold 47,000 units in China out of a total of 449,255 units, but China was the fastest-growing market, up 54.4%.
“Overall, we are on track to achieve our long term objective of 200,000 sales in the Chinese market,” the company said in a statement.
The U.S. market grew 24.7% to 67,273 units, followed by Sweden up 10.5% to 52,894. The company said that sales in China are expanding and that it has already started to build a plant in Chengdu. Volvo said that 2011 profit was affected by research and development costs and also by ndustrial capacity to support its expansion plans.
“Additionally, unfavorable exchange rates and higher raw material prices affected bottom line results negatively,” the company said.