Volvo Cars reportedly will form a car making venture with majority shareholder Zhejiang Geely as it plans to expand in China, the world’s largest vehicle market.
Volvo will announce “concrete details” about the joint venture in about two months, Michael Ning, a Beijing-based spokesman, told Bloomberg News.
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As part of the requirements for a Chinese car making joint venture, Volvo will also introduce a new China-only brand and more fuel-efficient vehicles, Ning added.
Under current rules, Volvo Car is considered a foreign carmaker, despite being wholly owned by Chinese interests, and needs a local partner before manufacturing in China, Ning said.
The company is awaiting approval from the National Development and Reform Commission for a proposed plant in the southwestern city of Chengdu, he said.
Volvo aims to double global sales to 800,000 cars in the 10 years through 2020, Bloomberg noted.
It plans to invest US$11bn worldwide over the next five years to tap rising demand in markets including China, Volvo CEO Stefan Jacoby said in February 2011.
Volvo is considering an additional manufacturing plant and engine factory in China to its proposed factory in Chengdu, Freeman Shen, head of Volvo’s Chinese operations, said in an interview in June, Bloomberg added.
A local media report this week suggested foreign automakers new to China could face hurdles and delays setting up there as the government moves to address overcapacity.
Volvo cars have, however, been sold in the country for some years and some models have also been assembled locally by a Ford/Mazda JV factory using a shared platform that dates back to Ford’s ownership of Volvo.
Ford sold Volvo Car to Zhejiang Geely for $1.8bn in August 2010, completing the biggest overseas acquisition by a Chinese carmaker. Zhejiang Geely owns 51% of Volvo, while the Chinese provinces of Daqing and Jiading have 37% and 12%, respectively, Bloomberg noted.
