Can Volvo Get Americans to Buy Chinese Cars?

Reports say that Volvo is preparing to ship Chinese-made cars to America. Will Americans buy them?

Jun 22, 2014 at 1:01PM

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Volvo makes a long-wheelbase version of its S60 sedan, called the S60L, at a factory in Chengdu, China. According to reports, Volvo is planning to send some of those Chinese-made S60Ls to the U.S., starting next year. Source: Volvo Cars.

Are Americans ready to buy "Made in China" cars?

Sure, most Americans are happy to buy a toaster -- or an iPhone -- that's made in China. But cars are a different matter. Attempts by Chinese automakers like BYD Auto (NASDAQOTH:BYDDF) to sell their vehicles here in the U.S. have mostly fallen flat so far. That consumer resistance has led automakers like Ford (NYSE:F) and General Motors (NYSE:GM) to reassure its customers that there are no plans in the works to ship their Chinese-made cars to the U.S. -- or to ship U.S. car-making jobs to China.

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The long-wheelbase S60L has a roomier back seat than the standard S60. Source: Volvo Cars.

But as Motley Fool senior auto specialist John Rosevear explains in this video, one famous name -- Volvo -- is on the verge of giving it a try. The famous Swedish carmaker is now owned by a Chinese firm, and it's gearing up to send its S60L sedan to America, according to reports.

Will Americans be willing to consider a Chinese-made car if it's made by Volvo? It looks like we're about to find out.

A transcript of the video is below.

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John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for Fool.com. We've been talking for a while about the possibility of Chinese-made cars coming to the U.S. The idea is that Chinese-made vehicles might be cheaper than those made here, or made in Japan, but there's a lot of resistance to the idea, a lot of buyers who are happy to buy a Chinese-made toaster don't want anything to do with Chinese-made cars.

We've seen the Chinese automaker BYD, which is part-owned by Warren Buffett's Berkshire Hathaway (NYSE:BRK-B), we've seen BYD try to market some electric cars and buses here, but they haven't really gotten traction, and most of the big-name automakers say that exporting cars from their Chinese factories to the U.S. isn't in the plan and probably won't be in the plan any time soon.

But one automaker is apparently getting set to try it. Volvo, the Swedish automaker known for its focus on safety, is apparently planing to start exporting cars from China to the U.S. as early as next year.

Volvo, of course, was owned by Ford for years, but when Ford CEO Alan Mulally started his restructuring efforts, Ford sold off all of the brands it had acquired over the years, and Volvo ended up being bought by one of the big Chinese automakers, a company called Geely.

According to a Reuters report this past week, an unnamed Volvo senior executive told a reporter that the company would start exporting two vehicles from China, one to the U.S. and one to Russia, sometime next year.

The one headed to the U.S. is a long-wheelbase version of the S60 sedan. It's called the S60L, and it's a version the company makes for the Chinese market, where customers demand a roomier back seat. Many luxury-car owners who work in China's cities hire drivers to deal with the traffic and ride in the back seat of their own cars, so backseat room and backseat luxury amenities have become very important in China, especially with any sort of upscale car or SUV. But Volvo thinks it can sell the S60L here as well, and apparently, it's expecting to export about 10,000 of them a year from China.

It's also planning to send the Chinese-made version of the XC90 SUV to Russia, but that'll be a smaller-scale thing, just a few thousand a year, according to the report.

But, it's interesting. Will American car buyers go for a car that's made in China if it's made by Volvo? Of course, Volvo has just a tiny presence in the U.S. these days; they sold just over 5,000 cars in May, which is only slightly more than Porsche or Land Rover sell; it's less than a third of what Audi sold last month. But the S60L is likely to get some attention because of where it's made. Will that be a good thing or a bad thing? We'll find out. Thanks for watching.

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Berkshire Hathaway, Ford, and General Motors. The Motley Fool owns shares of Berkshire Hathaway and Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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