By on November 11, 2009

The look of the future?

Reports in the Swedish media have Consortium Jakob AB still in the running to snatch Volvo from Geely. But hiring investment bank Morgan Stanley as collaborators must have spooked Geely — FoMoCo’s “preferred bidder” — and the Chinese automaker has upped the ante with some grand plans for Volvo. Geely is promising to sell no fewer than 1 million Volvos annually within four/five years.
According to the Wall Street Journal’s “contact with close ties to Geely,” the planned golden future for Volvo involves increasing sales in China from 12,000 cars this year, to 200,000 within the next three to four years. A new Chinese factory would produce 300,000 units per year, possibly including several larger models. According to one source, the Chinese market still doesn’t perceive Volvo as upscale enough, and these new models would be aimed at giving the brand a “grander,” more aspirational appeal.  On the strength of these new models and lower Chinese production costs, Geely plans to more than double Volvo’s world-wide sales (currently about 400,000), making total annual sales a nice round million. And they haven’t forgotten a treat to Volvo and Sweden either: the more sophisticated engineering and high-concept work will be left for Volvo’s domestic workers, you know . . . to keep the workforce in Sweden happy. Though doubling sales in China over a four-year period isn’t the most audacious proposition in the auto industry, more than doubling Volvo sales in Europe and America may prove extremely difficult. After all, offering stretched, chauffeur-driven Volvos doesn’t seem like the key to more US and European success. For now though China is job one for Volvo, and Geely is in the driver’s seat.
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7 Comments on “Geely’s Grand Plans for Volvo...”


  • avatar
    wsn

    From what I know, Geely doesn’t even sell 1 million units per year in its domestic Chinese market. The only way to achieve the stated goal would be to rebadge every Geely as a Volvo. Even then, it’s not guaranteed to work.

  • avatar
    YZS

    Volvo is going to be a very tough sell in Europe when they are owned by a Chinese company.  Safety can no longer be counted on as a selling point these days, so some major changes will have to occur to the brand in order for them to be successful. 

    It may bell be a different story in China though. 

  • avatar
    John Horner

    ” … the more sophisticated engineering and high-concept work will be left for Volvo’s domestic workers, you know…to keep the workforce in Sweden happy.”
     
    So the vast majority of Volvo workers can expect to be let go while a handful of designers and engineers get to do an ever smaller part of the job. It is an old story.
     

  • avatar
    wjo

    Well, at least there are expansion plans for Volvo….Ford has washed its hands of brand; the long sales process certainly hasn’t help car sales in the short term.
    There will be a big image problems in the West for a Chinese owned Volvo, but if Geely follows through and leaves engineering in Sweden, keeps a commitment to safety, and follows through with very public crash tests and better marketing  – well, there is hope for the brand.
    Larger, more upscale cars couldn’t hurt in the West either, as Volvo’s are stuck in the middle between luxury and mainstream brands.  A bigger back seat wouldn’t hurt most models either (although no one is looking to by an S80 limo…)  A Geely owned Volvo would do well to take up VW’s new marketing tactic in the US — luxury level of fittings without the price of BMW, Audi, MB.
     

  • avatar
    SamMule

    Does that mean that if one wanted to (hypothetically of course) buy a Volvo that now is the time? Just asking for a friend…

  • avatar
    dilbert

    If s/he’s dead set on getting a Volvo, now to Dec 31st is a pretty good time to bargain since uncertainty means you have a lot of chips to play with, and the dealer/sales people might not have a job in the near future, so they want to make every penny they can right now.

  • avatar
    Tosh

    Speaking of Volvo getting owned by the Chinese, how’s Jaguar getting along with their new owners?


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