Geely's Grand Plans for Volvo

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.