Malaysia Begins Export of Volvo S40 and V50 to Thailand while Geely announces big plans for Volvo

Thailand is often referred to as the Detroit of the East for a very good reason. In 2008 alone, Thailand produced 1,391,728 motor vehicles (excluding motorcycles). Out of these, 775,652 units were exported (according to The Thai Automotive Industry Association). In contrast, Malaysia produced only 530,810 vehicles in 2008 (Malaysian Automotive Association). Only approximately 60,000 of these were exported. We are quite used to having cars imported from Thailand via the AFTA (ASEAN Free Trade Agreement). Under AFTA's CEPT (Common Effective Preferential Tariff) scheme, cars with 40% ASEAN sourced content are eligible to be imported at between 0%-5% import tariff. As such, we are quite used to having cars imported from Thailand. Besides Protons, the only mainstream vehicle that I know is being exported to Thailand is the Toyota Hiace, which is made by UMW Toyota's ASSB plant in Shah Alam. Now however, Volvo joins the list of vehicles exported from Malaysia. Since October, Swedish Motor Assemblers (SMA) have been exporting the new facelifted S40 and V50 2.0 with PowerShift to Thailand. SMA is the oldest car plant in Malaysia that currently produces Volvo S40, V50 as well as Volvo and Renault trucks.


Previously, the S40 and V50 was only available in 2.4-litre guise and was never made available in Thailand because the large 2.4-litre engine will attract heavy taxes. The car would have been priced 30% higher than Volvo Cars Thailand wishes to. Volvo Cars Thailand was chugging along with only the XC90 and S80. A smaller 2.0-litre petrol engine is available in Europe but not with an automatic transmission - which is hyper important in Asian markets. To put this into perspective, for Asians to have an automatic transmission option is even more important than for Europeans to have have a diesel estate option. Spend some time in Beijing, Bangkok, Jakarta and Kuala Lumpur traffic and you will understand why. It's not exactly the same reason as Americans being lazy to drive stick shift. As mentioned in a previous post, Volvo was seriously marginalized under Ford ownership and only until recently that the 2.0-litre engine was mated to an automatic transmission. But as a consolation, the tranny is a 6-speed twin clutch unit made by transmission specialist Getrag. It is also the only twin clutch transmission vehicle assembled in Malaysia. The engine has also been tuned to accept E10 gasohol fuel, which also makes it eligible for a lower tax rate. Which also implies that SMA makes the only locally assembled E10 gasohol compatible car. So does this mean all Malaysian S40 and V50 are E10 gasohol compatible? Using gasohol fuel would require modifications to the fuel system and engine control unit software as alcohol corrodes rubber and plastic components as well as require a slightly different ignition timing.

The reason for Volvo Cars Thailand to choose Malaysia as its source for S40 and V50 is simple - these two models have already been assembled here since 2004 (pre-facelift version which was never sold in Thailand). All the jigs are already in place currently the plant is grossly under utilized given the low sales volume of Volvo cars. Volvo's sales performance in Thailand is dismal and it does not make any sense to invest further in jigs and tooling equipments. It's a combination of legacy and cost issues.


Following an earlier post regarding Geely's intended acquisation of Volvo Cars, Geely reported that it plans to more than double Volvo's sales to near 1 million vehicles a year by 2013. Under the plan, Geely will build a new Volvo plant in China with annual capacity of 300,000 vehicles to draw on China's market potential and inexpensive labor. Geely will also use Volvo's manufacturing capacity fully in Europe to sell 600,000 vehicles there and in North America. The Wall Street Journal also reports that Geely will add two or three bigger and more luxurious models to Volvo's lineup over the next three to four years. As mentioned earlier, don't listen to the Sino-phobes. It is not that Ford is doing particularly great things with Volvo at the moment. It's sad to see an illustrious brand that build its foundation on very noble values (Volvo is all about the well being of people) dying a slow death. Sales performance of Volvo Cars is so low in the dumps that the they have nothing much to lose by partnering with Geely. The opportunity to purchase an automotive brand comes very rarely, maybe a few times in a century. Chinese car makers are seizing this opportunity to snap up whatever troubled Western car makers wishes to unload. Let's give Geely the benefit of the doubt.

Below are some driving footages video of the new S40 and V50. I have to admit that I have a secret fetish for modern day Volvos. To say that you love Volvos is not going to win you admiration or many friends amongst petrolheads. Many might call them boring. But unlike many petrol heads, an everyday car is to me nothing but a tool. It's not an extension of who I am. Volvos are honest, sensible and unpretentious tools. The recent styling direction makes them just being pleasant enough to the eyes, but nothing shouty. A pity that folks here don't quite appreciate Scandinavian values.