Volvo Could Turn Its Belgian Plant Into A Tariff Back Door For China

European automakers have a glut of excess capacity, which has prompted several to explore partnerships with Chinese firms looking to build vehicles on the continent. Stellantis and Dongfeng got the ball rolling, while Nissan and Chery are discussing contract manufacturing in the United Kingdom.

Fast forward to today, and it appears Volvo could follow suit. In a short release, the company announced they’ve signed a Memorandum of Understanding with the Belgian federal government and the regional government of Flanders to “strengthen the long-term competitiveness” of their Ghent plant.

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The deal apparently calls for the government to cough up to €119 ($136.4 / £100.8) million for “industrial, innovation and ecological initiatives, as well as financing programs and measures.” Volvo said the money will “help secure the future utilization of the plant and support continued manufacturing activity.”

Besides paving the way for continued Volvo production in Belgium, the automaker hinted the move could create opportunities for the facility to be used for the “contract assembly of cars of other brands.” The automaker pitched this as a win-win, as it would increase plant utilization as well as contribute to industrial activity in the region.

Volvo didn’t say which other vehicles could be built at the facility, but the company is owned by Geely. Besides their namesake brand, the firm owns Polestar, Zeekr, and Lynk & Co – among others. For the Chinese brands, Ghent production would be appealing as it would enable them to avoid hefty EU tariffs.

While only time will tell what happens, the facility currently builds an assortment of different models, including the EX30, XC40, EX40, EC40, and V60. Volvo says the plant opened in 1965 and employs around 6,300 people.