Volvo Cars delays plan to build Lynk & Co vehicles in Belgium

By Esha Vaish

STOCKHOLM (Reuters) - Volvo Cars has decided to delay building Lynk & Co branded cars at its plant at Ghent in Belgium because of increased macro-economic uncertainty, a spokesman for the Geely-owned [GEELY.UL] Swedish carmaker said on Friday.

Lynk & Co, co-owned by Volvo's owner and its two brands Volvo and Geely Auto, began selling its first model in China last year. The vehicle is currently produced at a Volvo-operated plant in Taizho in China.

The original plan, set out in March, was to begin production in Belgium at the end of 2019. But the Swedish company has had to replan what cars to produce in which part of the world due to a trade dispute between China and the United States that has led to additional tariffs.

"The decision to revise the manufacturing plans for Lynk & Co was taken due to an increased macro-economic uncertainty, and Volvo has reviewed how we best can utilize the group's global production infrastructure," the spokesman said.

The changes would not impact employment in Ghent and Lynk & Co's cars would instead be exported to Europe from China next year, he said in response to emailed questions.

Volvo also has plans to begin selling Lynk & Co vehicles in the U.S. in 2020.

As global uncertainty has mounted, the company has also been forced to shelve plans to float its shares and like other carmakers, Volvo is now facing added pressure from a demand slowdown in its main market, China.

The company has found itself in need of more free capacity at Ghent, after being forced to move production of its V60 station wagon out to Belgium and China to free up space at its Swedish plant.

This is because by the end of this year it plans to move most of the production of its best-selling SUV, the XC60, for export to the U.S. market to its plant to Torslanda, Sweden from Chengdu, China.

The spokesman said on Friday that Volvo had also decided to produce its S60 luxury sport sedan in China from next year, altering an original plan to manufacture the vehicle only at its U.S. factory and export it to China.