Here's why Chinese-owned Volvo is spending $500 million to fight BMW and Mercedes in the US

The company responsible for this 40-ton big-rig that stops itself on a dime is building a $US500 million assembly plant in South Carolina.

It will be Volvo’s first-ever US assembly operation, sitting right in the backyards of its luxury rivals, BMW — which has a plant in Spartanburg, SC — and Mercedes-Benz, which builds its wildly popular SUVs in Alabama.

Volvo has good reason to want to mix it up with the Germans stateside. Its sales in the US are tanking.

It sold 56,000 vehicles here in 2014, down 8% from the previous year, while juggernauts BMW and Mercedes signed up about 670,000 new owners combined. Even Porsche sold more cars than Volvo last month.

It’s an uncomfortable reminder for Volvo that it better shape up or bust a u-turn if it wants to be competitive in the US market.

Volvo XC90Volvo Car GroupA front view of the 2016 Volvo XC90 SUV.

Volvo is one of many automotive brands that have fallen out of favour with American buyers in the last decade.

It has only recently begun to turn the corner, thanks to a new corporate owner, Zhejiang Geely Holding Group in China.

That new gusto is primarily fuelled by the company’s fresh focus on its original strength: safety.

The company is pumping up that focus with a goal that “no one should be killed or injured in a new Volvo by the year 2020,” Volvo’s Technology and Product expert, Jim Nichols tells Business Insider.

Nichols says that goal begins with a suite of standard crash-avoidance technologies that help Volvos detect potential threats on the road.

Volvo has been fine-tuning that technology for years, but the engineers are apparently just as interested in preparing for those times when a crash is unavoidable:

To that end, Volvo’s new South Carolina plant looks like it may help the automaker scale those endeavours to match its beefier rivals. Volvo expects the new assembly plant to employ between 2,000 and 4,000 people after it opens in 2018 and produce about 100,000 vehicles per year.

In the meantime, Volvo will have to leverage its global sales success to win back American buyers (it sold a record 470,000 vehicles worldwide in 2014). Nichols says they will do that in the next 4 years by “replacing every car in the lineup,” beginning with the 2016 XC90

More than 1,900 of the first XC90 models sold out in just two days last fall. The pre-orders quickly grew to more than 30,000 worldwide — probably the first time people have been so quick to snap up a Volvo.

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