Volvo Cars commits to the future of its Ghent factory, the Swedish car manufacturer’s headquarters announced on Wednesday. The company has reached an agreement with the Belgian federal and Flemish governments for support and financing measures totaling up to €119 million. The arrangements are documented in a Memorandum of Understanding (MoU).

The package aims to support industrial, innovative, and ecological investments in Volvo Car Ghent. Alongside efficiency measures, Volvo intends to strengthen the factory’s competitiveness and secure long-term production in Ghent. Some analysts are more hesitant: aren’t we welcoming a Chinese Trojan horse?

Contract manufacturing possible

Notably, Volvo explicitly opens the door to assembling cars from other brands. Contract manufacturing could better utilize the Ghent factory’s capacity and bring additional industrial activity to the region.

“In addition to the continued building of Volvo cars, this could also create possible opportunities to use Volvo Car Gent for contract assembly of cars of other brands. This would increase plant utilization and contribute to industrial activity in the region,” Volvo’s press release explains.

“We appreciate the engagement and support from the Belgian federal and Flanders regional governments,” said Håkan Samuelsson, President and CEO of Volvo Cars. “Volvo Car Gent is a highly capable plant with an experienced team. With these necessary improvements in competitiveness, we are strengthening its future as a car plant in Belgium.”

“Volvo Cars has been part of Flanders’ industrial fabric for decades,” says Flemish Prime Minister Matthias Diependaele. “Today, we are building the next chapter of that long-standing partnership. By creating the conditions for new investments, we are securing a strong industrial future for the Ghent site and the wider automotive ecosystem around it. That is how we secure long-term prosperity in Flanders.”

“Creating the right framework conditions, including fostering a competitive investment climate, strengthens our country’s position as an attractive location for high-quality industrial employment in Europe,” adds Belgian Prime Minister Bart De Wever. “This MoU helps secure the future of the Ghent plant and anchor advanced vehicle manufacturing in Belgium for the long term.”

What future?

Apparently, the MoU has secured the near future of the Ghent factory. Although in the MoU, there’s talk about the next ten years, earlier experiences in Belgium have left a trail of doubt and disbelief.

When, in 1997, the Renault plant in Vilvoorde (north-east of Brussels) was closed, it was reputed to be the best factory of the French manufacturer, especially for the quality of its assembled products. Nevertheless, the French weren’t prepared to close a less qualitative factory in their own country to save Vilvoorde. Case closed.

Same story in Antwerp. At the end of this century’s first decade, Opel’s Antwerp plant was considered the best-organized worldwide, and GM’s managers came from all over the world to visit and learn from it. But the same occurred again: In 2010, Opel preferred to close its Antwerp jewel rather than a plant in its home country, Germany. Later on, Bochum, Germany, would close its doors too, but by then GM was already looking to sell its entire European production infrastructure and the brands that went with it.

Same story, a little bit later (2014),  in the east of Flanders, where Ford had its Genk factory. Assembling the Transit van had already left for Turkey, and the production of the Mondeo and other larger (MPV) Ford models was transferred to Spain and would bleed to death fairly soon.

Last in the row was Audi Brussels in 2025. the plant in the Forest commune of Brussels was transferred from Volkswagen to Audi at the end of the first decade and was readied in 2018 to produce the first electric Audi, the e-tron (later Q8 e-tron). The future looked bright; subsidies from the Belgian government were appreciated. Nevertheless, when EV sales didn’t grow as expected, it was once again a ‘foreign’ plant that had to close. The situation at Volkswagen has worsened ever since, and now 4 factories in Germany are in danger.

So, one can imagine that Belgian autoworkers are rather skeptical when a deal like the MoU between the Belgian authorities and Volvo was announced. Isn’t it Volvo that has built a completely superfluous factory in Slovakia because a few years ago it was thinking of selling 800,000 Volvos in Europe and 1.2 million plus worldwide? At the moment,  Volvo sells some 400,000 cars in Europe and more than 700,000 worldwide, but it has a cumulative capacity of 1.45 million cars.

The (Chinese) Trojan horse

So, when Volvo wants to do something about this overcapacity, it has to double its sales, which is very unlikely in the current context, or admit other brands to assemble their models in Volvo factories. Fortunately, Volvo is part of one of the largest Chinese automotive holdings, Geely.

The former Swedish manufacturer shares a lot of technology (and electric platforms) with its sister brands under the Geely umbrella, from Polestar over Lynk&Co to Smart and Zeekr. The future of Volvo’s Ghent factory also, for sure, lies in the possibility of assembling other (pure Chinese) makes in Ghent, where the electric Volvo EX30 is the shining star, sharing a platform and other components with models from Smart, Zeekr and other Geely brands.

The problem with this new policy is, of course, whether Volvo is bringing in a Chinese Trojan horse. It isn’t a new problem. Genuine Belgian cars had already disappeared between the two world wars, and this small but centrally located country in Europe was eager after WW II to attract car brands from across Europe to assemble here. At a certain period in the nineties, Belgium was the biggest car-producing country (per capita) in the entire world.

Now, only Volvo in Ghent remains, and while many people have greeted the recent MoU with relief and joy at the continued assembly of cars in the country, others are asking themselves whether this is still the road to follow. As the decision headquarters are always abroad, the Belgian car industry will always be at the mercy of foreign companies and investors.

The new fact is that they will be Chinese now, and that the European Commission and other EU authorities are, in fact, frantically trying to reduce dependence on Chinese industry, which surely isn’t that obvious when we’re talking about electric cars.

Of course, Volvo technology is still very European for now, developed mainly in Gothenburg, but here the Chinese influence is also growing rapidly. Assembling Chinese models in Ghent will almost be inevitable. Belgium has been successful with this policy in attracting foreign carmakers for many decades, but it remains vulnerable.

That, for sure, won’t change. The question is whether we have to further nourish this dependence. In Ghent, the approximately  6,500 (direct) workers say yes, of course, as do the authorities who want to preserve these jobs.

More long-term planners and analysts think that assembling cars is, ultimately, a lost battle for this small country and that Belgium has to focus on other, newer technologies where it can excel as an innovator. The future will tell.