Geely to boost Volvo annual China sales to

　　According to Shanghai Securities News, it is the most attractive news in the first half of the year that Geely has paid a record number in the history of Chinese acquisition of overseas vehicle companies to purchase Swedish luxury car brand Volvo. Since Zhejiang Geely Holding Group signed a deal on March 28 with Ford Motor Co. to acquire the U.S. auto giant’s Volvo car unit for $1.8 billion, all the attention has been given to the Volvo brand’s future in China in the industry.

　　It can be said Geely is facing extraordinary challenge to make the Volvo brand one of the successful and profitable luxury car brand in China’s auto market.

　　Geely has now worked out a five-year plan for the development of the Volvo brand in China. Under the plan, Volvo China annual sales will reach 150,000 units by 2015, a person familiar with the matter said today.

　　According to one source, Geely is now working on the due diligence and the expected plan. If everything is going on well, the deal will be finished in the third quarter of this year. “Presently, Geely is waiting for the approval of Development and Reform Commission and the State Council while Sweden is waiting for the approval of EU.”

　　According to the planning of Li Shufu, chairman of Geely Group, he will establish a new Geely group, which will run the Geely vehicle business, the Volvo vehicle business and the rest Geely’s business like real estate, colleges, ect., separately.

　　At present, the team in charge of Volvo car business has set an ambitious goal to boost Volvo annual China sales to 150,000 units by 2015. Geely will expand the Volvo line-up with more Volvo vehicles to increase the Volvo sedan sales in China. In the third quarter of this year, it will bring the Volvo SUV XC60 into China for local production, followed by the Volvo S60 sedan to be produced in the second quarter of 2011. While production of the Volvo S40 sedan at Geely's Chongqing plant, located in South Central China's Chongqing municipal, will be halted, the same person revealed.

　　As for the production base for Volvo, several Chinese cities such as Beijing, Ningbo, Chengdu and Shanghai will all have a chance to compete, and Shanghai will most likely to be chosen, according to recent news.

　　In fact, the acquisition has also brought about doubts. As an U.S. auto giant, even Ford is still unable make Volvo profitable, as a private enterprise in China, how can Geely turn the scale?

　　However, Jin Yongsheng, research manager of Sinomc is very optimistic about the future of Volvo after the acquisition.

　　He told the reporter that, firstly, Ford’s strategic platform is rightly the cause of the failure of Volvo in the luxury car market. No matter the C30, S40, S80, XC90 in China or the V50, V70, C70 is made by Ford global strategic platform. Adopting the platform of economic models has made loss the technical advantages of luxury cars. For example, the Audi and VW will never share the same technology platform simultaneously. Sometimes Audi gives some technologies used for years to VW to compete in the mass market. But it has never happened a civilian vehicle platform is used by a high-end car.

　　Secondly, the acquisition is equivalent to relax the Volvo, who can readopt the luxury line by the chance.

　　Since the beginning of this year, Volvo has gain increasing growth in China auto market. The latest statistics from the company shows that during the first five months of this year, Volvo car sales increased 108% in China, once again leading the luxury car market. Li Shufu confidently said that Volvo is expected to become profitable in two years.

　　However, can Volvo bring huge profits and brand enhancement for Geely?

　　Li told the reporters, “We have thought much about how to achieve profitability and rapidly form a strong competitive power. Too small scale is the biggest problem of Volvo. Although its size is far from enough compared with Mercedes-Benz and BMW, its R & D investment is almost the same with them. Therefore, Volvo has possessed a large number of intellectual property rights and patented technologies. Due to the relatively small scale, the cost of each vehicle is relatively high, which leads to losses. We will try our best to give full play to its technologies to expand sales. Once the scale is expanded and manufacturing cost is lowering down, profits will come naturally.”

　　(Translator: Yalong/Jessie)

　　See original Chinese report Please click: http://auto.sohu.com/20100625/n273063142.shtml