PARIS -- Caught between a falling dollar and the prospect of a protectionist trade law, Swedish auto maker AB Volvo says it may consider making autos in the United States.

Pehr G. Gyllenhammar, chairman and chief executive of Volvo, Sweden's largest company, also said in an interview that the cash-rich company is actively shopping for U.S. food and truck manufacturers.

Though he wouldn't speculate on the dollar's future course, Gyllenhammar said an additional 15 to 20 percent decline "would begin to get painful." Under such circumstances, he said, U.S. car production would be "conceivable."

If U.S. manufacturing were necessary, Volvo could "start from scratch" by building new facilities or acquire factories shut down recently by other auto makers, he said.

Last Friday, Volkswagen AG announced it is closing and selling its factory in New Stanton, Pa. He noted that Volvo has "a big block of land" it acquired in 1973 in Chesapeake, Va.

Volvo had intended to build a car factory there, but the oil crisis forced it to abandon those plans. Though the company is selling some of the property, it will retain 257 acres, which could be used for future development.

Last year, Americans bought 111,100 Volvo cars. The United States is by far Volvo's largest market, representing 26 percent of its total unit sales. Volvo, which has prospered by cultivating a reputation for durability and safety rather than styling or speed, is America's second-largest European car import, after Volkswagen.

Despite Volvo's policy of hedging against currency shifts by purchasing forward dollar contracts, in the past 21 months the 40 percent fall of the U.S. currency against the Swedish krone has taken more than $496 million from Volvo's bottom line, including $165 million in the first nine months of this year.

Any further drop in the dollar would be felt immediately by the company. To partially offset the dollar's decline, Volvo in the past year has increased its U.S. car prices three times for a total of about 5 percent. While further increases are envisioned, Gyllenhammar said he is not willing to sacrifice Volvo's U.S. sales and market share, currently at 1 percent.

Brand loyalty, he said, has its limits. "We have to be humble with consumers," he said. "They all react to price."

Gyllenhammar said a tough protectionist law could force Volvo to make cars in the United States. Though "slightly more optimistic" than he was a few months ago about the trade legislation, he said Volvo and other Swedish companies would be particularly vulnerable to a law that linked protectionist measures to a country's trade surplus with the United States.

"It wouldn't be possible for us to find a replacement for the U.S. market; we'd be absolutely determined to stay," he said. "If that means producing more in the United States, we would go ahead."

In 1986, the value of Sweden's exports to the United States was 2.5 times the value of U.S. exports to Sweden, giving Sweden a trade surplus of $2.77 billion.

Volvo produces cars at two plants in Sweden, with a third due for completion next year, plus plants in Ghent, Belgium and Halifax, Canada. In addition, Volvo Car BV, in which Volvo has a 30 percent share, produces two Volvo models in Born, Holland.

Gyllenhammar added his voice to a chorus of other auto executives predicting a 1988 downturn following last month's stock market plunge. "There's no real chance we'll have a growth market" in 1988, he said, explaining his belief that the economy had been due for a slowdown anyway within the next year or two.

Though sales have yet to reflect new consumer attitudes, Gyllenhammar said Volvo is now "seeing signs" of what may lie ahead in the reduced floor traffic at its dealers.

"The whole market is jittery," he said.

Challenging conventional wisdom that blames the U.S. budget and trade deficits for the current crisis in the financial markets, Gyllenhammar said, "No one really knows what's causing it and no one really has any control. I see a complete abdication from power from almost every one of the world players."

Like other world auto makers, Volvo has seen its share price suffer with the stock market turmoil, declining more than 30 percent since Oct. 16.

In addition, Volvo's own investment portfolio of other Swedish stocks fell 22 percent from its peak in September to about $1.32 billion. Nevertheless, with a war chest of about $3.47 billion, Gyllenhammar said Volvo was well-positioned to take advantage of lower stock prices as it searches for food industry acquisitions in Europe and the United States as well as additional truck capacity in the United States.

The company has an additional $393 million after the sale of its 49.6 percent stake in Hamilton Oil Corp. in the United States, which was completed yesterday.

In 1986, Volvo's food operations, mostly in Sweden, accounted for sales of $1.43 billion, or about 10 percent of the Volvo group's total sales of $13.9 billion. "We're convinced that {food} is not only a stable business in earnings, but with good, quality brands, it's a loyal business that has staying power," he said, adding that 1987 "looks good" for the sector.

For the first nine months, group pretax income was off 3 percent to $975 million, despite earnings increases in the third quarter from food and truck-making operations.

In the heavy truck industry, Volvo is looking at other companies in the United States as acquisition targets, Gyllenhammar said.

Despite an ongoing expansion program, Volvo GM Heavy Truck Corp., a joint venture formed last December with General Motors Corp., is selling every unit it can make at its Greensboro, N.C. plant.

The plant is producing 56 trucks per day, and through Oct. 31, the venture had sold 10,311 units.

"Lack of capacity has been more of a problem than we had anticipated because of the strong market," Gyllenhammar said.

He said the venture, which Volvo manages, has gone well so far, despite the anticipated problems involved in integrating the two companies' truck dealer networks.

"There will be some good profits" from the operation this year, he said.