Volvo acknowledges overcapacity: Ghent plant to start producing cars for other brands

Volvo Cars is officially opening its plant in Ghent, Belgium, for contract manufacturing of vehicles for other brands. The facility will become one of two company sites where cars other than Volvo can be assembled. The second such plant is located in Chengdu, China.

The reason for the decision is excess production capacity. In 2025, the Ghent plant produced 212,177 vehicles, and after the launch of the Košice plant in 2027, Volvo's European plants will have a combined capacity to produce more than 760,000 cars per year. Meanwhile, Volvo's global sales last year amounted to approximately 710,000 vehicles.

Volvo directly acknowledges the problem of excess capacity. To load its plants and reduce costs, the company is increasing automation, consolidating procurement with Geely, and intends to use Ghent for contract assembly. In July, a support package of up to 119 million euros was agreed upon to enhance the competitiveness of the Belgian site.

This applies not only to Geely brands. Francesca Gamboni, Head of Purchasing and Supply Chain at Volvo, stated that both Geely group brands and other automakers are showing interest. A specific third-party customer for Ghent has not yet been named.

The most obvious candidate remains Geely's own products. Earlier, the company reported that its premium models would begin production at Volvo's European plants from 2028. Local assembly will allow vehicles to be produced directly in Europe, without shipping finished cars from Chinese plants.

At the same time, Volvo is preparing the largest model range update in the company's 99-year history – 13 new cars are planned by the end of 2030. Seven are intended for Western markets, and another six are being developed specifically for China in cooperation with Geely.

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