Chinese Fire Drill, Starring Ford, Volvo, Geely, Chang'an, PSA, Hafei, And Many More

During the courtship stage between Geely and Volvo, and after their recent nuptials in Gothenburg, Sweden, we often raised the matter of Chang’an. Chang’an has had a joint venture with Ford since 2001. Under the JV, they also make Volvos in China, the S40 and S80, to be exact. They don’t make them in large numbers. 22,405 Volvos were sold in China last year, up nearly 80 percent compared to 2008. The S40 has been on the Chinese market since 2006. The S80L, a long version of the S80, was introduced last year. Chang’an had been in play as a suitor for Volvo, but bowed out.

What will happen to Chang’an’s Volvos?

They’ll continue making them, says Gasgoo. Chang’an has a contract with Volvo that gives them the rights to the Volvo S40 until 2015, and to the S80 until 2018.

Having bought Volvo lock, stock, and barrel, Geely needs to honor the contract with Chang’an, a former factory of military hardware. Some say, the Volvo S60 might also be built by Chang’an under a 10-year deal, but it could be the old one.

In the meantime, Chang’an is looking for other play pals. They might have found one in France’s PSA, say Gasgoo. They report that a preliminary cooperation agreement will be signed in Shenzhen this month. “Chang’an will soon host a major event in Shenzhen,” a Chang’an spokesperson said last week-end.

Chang’an has a facility in Shenzhen. The plant is idle. Chang’an came into the facility after the Aviation Industry Corporation of China (AVIC) handed over its car making ventures, Changhe and Hafei, to Chang’an last year. The Shenzhen facility came from Hafei.

The link-up with PSA is not without the usual complications. PSA and Chang’an had been in on-again, off-again discussions for a while. PSA has an existing joint venture with Dongfeng. PSA had tried to set up something with Hafei before, but the deal was torpedoed by Dongfeng.

Still with me? Who says China is easy?