By on June 25, 2010

What are Geely’s plans for Volvo? Which cars will be built? Where and when? How many? Who will run the show? Where is the money coming from? These are just some of the questions government regulators want to know before they put their stamp of approval under the deal. We are not just talking Chinese regulators. European regulators need to give their nod also. For that, they need Geely’s plans. Some of them were leaked. Some of the leakage is quite explosive.

In March 2010, Geely signed a much publicized deal with Ford to take over their Volvo unit for $1.8 billion. The deal hasn’t closed yet. Volvo is still being operated by Ford. The deal needs approval in Brussels and in Beijing, and money needs to change hands. Both has not happened yet.

However, Geely has prepared a 5 year plan “to make the Volvo brand one of the successful and profitable luxury car brands in China’s auto market,” says Gasgoo. Here are the most salient point, according to the “person familiar with the matter.”

  • Geely’s Li Shufu expects that Volvo is profitable in two years.
  • By 2015, Volvo wants to sell 150,000 units in China alone.
  • Geely will expand the Volvo line-up with more Volvo vehicles to increase the Volvo sedan sales in China.
  • In Q3/2010, the Volvo XC60 will be produced in China
  • The Volvo S60 sedan will start production in China in Q2/2011
  • Chinese production of the Volvo S40 sedan will be halted the same person revealed.
  • The future site for the Chinese Volvo plant has not been chosen. Beijing, Ningbo, Chengdu and Shanghai compete.

As far as the future location goes, there is a new development. Reuters reports that the Chinese regional asset manager Daqing State Asset Operation Co. will be taking a minority position in the new Volvo company. The exact size of the stake taken by Daqing and financing issues will not be unveiled until the deal is closed, said Anders Fogel, Swedish spokesman for Geely. Geely will remain Volvo’s controlling shareholder. Daqing is based in the Heilongjiang Province, in China’s old Manchuria rust belt, near Harbin. Officially, it remains open whether the investment comes with the proviso that the Volvos will be built in the area. Inofficially, it’s unlikely that  a small town in an inhospitable corner of China drops serious money on Volvo just to invest their money.

The city of Daqing is brand new, it was founded in 1959 to house workers extracting oil and gas from the Daqing oilfield, and is home to approximately 3 million people. A village by Chinese standards.  A few months ago, it got its own airport. However, Daqing comes highly recommended. “Learn from Daqing in industry” was a slogan by Mao Zedong.

If Volvo moves to Daqing, Swedish Volvo personnel should feel quite at home. The winters in the province that shares a border with Siberia can be more brutal than in Sweden.

And who will lead the brand? It will be someone who is familiar with Europe, America, and China: According to the Frankfurter Allgemeine Zeitung, Geely lured Stefan Jacoby away from his job as President of Volkswagen of America. Jacoby had been Controller at Volkswagen Audi Nippon KK in Japan. From 1997 to 2001, he was responsible board member for Asia-Pacific at Volkswagen. After stint as head of Mitsubishi Europe, he returned to Volkswagen and was made CEO of the VWoA in 2007. Geely could hardly find someone more qualified and with more knowledge of markets and plans. The FAZ must have the information from someone intimately familiar with the matter. They already know that the Daqing group will take 37 percent of Volvo.

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