U.S. Volvos Made in China: A Bad Idea CEO Stefan Jacoby Needs to Fight

At the Detroit Auto Show Tuesday, Volvo CEO Stefan Jacoby stood in front of a Volvo C30 electric car that had recently been through a 40 mph front corner offset crash. It looked like hell, but its battery pack was largely intact and still functioning, and its occupants would have walked away, had they not been dummies. Volvo has safety as a first consideration, and that fully extends to its electric cars (the Ener1 battery pack is reinforced and serves to stiffen the car in crash scenarios).

Jacoby did not say much about future product plans in his prepared remarks in Detroit. But off the podium he said that the brand's new owner, Zhejiang Geely Holding Group, one of China's largest carmakers, is thinking of building Volvos in China and exporting them to the U.S. Given Chinese automakers' safety record (and reputation), this is a terrible idea, and one that Jacoby is going to have to use his considerable powers of persuasion to resist. It will be a delicate dance.

How to tell your boss his idea is stupid
Getting the Volvo board to go along with Chinese models for the U.S. may be a hurdle. If Jacoby wants to avoid that export outcome, he'll have to be a masterful reader of Geely's leadership, which obviously doesn't want to be told that its cars aren't good enough for export.

Obviously, Geely could reduce costs by building Volvos in China instead of Sweden and Belgium. Building them in the U.S., another option for Volvo, would also be more expensive than a Chinese production line. Chinese law heavily favors and subsidizes automakers with domestic production, which is one reason Ford (former owner of Volvo) still makes Volvos in China (an arrangement that is continuing). But those are for the local market.

In Detroit, Jacoby said that Chinese production helps ease currency exchange issues with the euro and the dollar that make European cars expensive for American buyers. He described Chinese Volvo export to the U.S. as "one opportunity" to address that problem. He didn't say what he personally thought of the idea, but Jacoby (and other Volvo executives) have repeatedly stressed the idea that Geely doesn't plan to interfere with Volvo's independence.

Why Americans fear Chinese-made cars
Americans buy lots of Chinese-made products, but they have good reasons to be wary of Chinese cars. A brief ride in the BYD F3DM plug-in hybrid in Detroit indicated some of the shortcomings of Chinese quality standards. The car actually performed better than I thought it would, but there was plenty of noise, panel fit was far from ideal and the interior would have been state-of-the-art on an '84 Chevy Citation.

Numerous YouTube videos depict problematic Chinese crash tests. Here's a 2008 Geely Vision going into a frontal offset test similar to what was done with the Volvo C30 Electric. I wouldn't have wanted to be a front-seat passenger in that car:

Here's an actual question from a Chinese driving test:

What obligation do the persons involved in a traffic accident undertake when the accident is being investigated?

• Making up a story about the accident
• Complaning of the fault the other party
• Making a true statement of the accident without concealing the truth
• I don't know

If Volvo's Chinese factory is run by Western executives with a firm grasp on safety standards and given complete autonomy, it could produce the same kind of results that Japanese companies have gotten out of American workers at numerous plants here. Does anyone have quality complaints about U.S.-made Nissans, Hondas and Toyotas?

Paul Midler's insider account, Poorly Made in China, makes clear that cutting corners and costs is ingrained into the Chinese manufacturing mindset. And Volvos made with anything less than the fanatical Swedish attention to safety detail are going to be on, well, a collision course with the marketplace. Yes, Stefan Jacoby has a big job ahead of him.

Related:

• Holding on to Safety is Job One for Stefan Jacoby at Volvo