Geely & Volvo to Jointly Develop Cars, Volvo Pilot Production Begins in Chengdu, Two More Chinese Volvo Factories Approved

TTAC Staff
by TTAC Staff

Pilot production begins at Volvo’s Chengdu plant in China

Geely Automobile Holdings Ltd., owned by the same Chinese company that bought Volvo Cars in 2010, announced that it will soon start developing cars jointly with the Swedish company. The cars will be intended for the Chinese and export markets and will go on sale in 2015. Geely has ambitions to be China’s largest car exporter. Working jointly with Volvo is seen as giving Geely products some of Volvo’s reputation for safety and reliability.

“We have entered into actual research and development stage and I believe we can see the new product in the year after next,” said Geely Chief Executive Officer Gui Sheng Yue yesterday in Hong Kong.

Zhejiang Geely Holding Group Co., bought Volvo from Ford for $1.8 billion and last year the two companies signed a memorandum to “leverage its full access” to technology to develop vehicles. Earlier this year, Volvo announced that it was going to build a joint R&D center with Geely in Gothenburg. Volvo has also started assembling test builds at its first factory in China, in Chengdu, which will have an annual capacity of 120,000 cars.

Volvo Cars also announced today that it has received approval from the Chinese national government to build two more factories in China. The assembly plant in Daqing, in northeast China, will have a capacity of 80,000 units a year and is hoped to be fully operational some time next year. The facility in Zhangjiakou will be an engine plant and it will supply the Chengdu assembly operation where actual production will begin in Q4 2013. The two assembly plants are not expected to reach capacity for a few years.

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  • Wheeler Wheeler on Aug 24, 2013

    Geely has shown its mettle in the huge leaps it has made in quality over a short time. I think the team of Volvo-Geely shows great promise.

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    • Tostik Tostik on Aug 25, 2013

      @jeffzekas I own 3 Volvos. 2002 V70, 1998 V70XC, and a 2006 2.5T AWD XC90. They've all been fantastically reliable cars. Maybe a repair bill every other year. The XC90 is mine, the V70 is my daughter's, and the 1998 V70XC is my wife's. Every time I talk about getting my wife a new Volvo she gets mad--she loves her 1998 V70XC. Volvo for life!

  • MoDo MoDo on Aug 25, 2013

    Should've sold the company to BMW, they wanted Volvo and were in the running.

  • Oelmotor Oelmotor on Aug 26, 2013

    Bye bye Volvo, it was nice knowing you. BTW...I like how the employee on the right is wearing her helmet.

  • PandaBear PandaBear on Aug 27, 2013

    I don't see it as doom and gloom like all you guys are. Geely bought Volvo for the tech and know how, not to knock down their Swedish plant and lay off all the workers to outsource there. Currently the Chinese still relies heavily on foreign help to keep their heavy industry (and to some point light industry) going, and they are not feeling comfortable because if you look at Malaysia, Thailand, and Indonesia you know being just a manufacturing site don't translate into good domestic brand and design over time (Japanese make sure that none of the local partners learn anything important). Buying a good quality near bankrupt foreign firm is the only way to learn that quickly. I'd see them run Volvo the same way they run Lenovo: keeping the quality while building up a high quality Chinese brand, so they will not need to rely on foreigners 20 years from now. Your American Volvo will still be from Sweden, with some Chinese parts made with Volvo Swedish engineers supervision in China, just like how every electronics of American / Japanese brands are made in China these days. They may gradually reduce the head count in Sweden over time (retirement) and make it the flagship only factory with R&D engineering office.

    • Tostik Tostik on Aug 27, 2013

      I think BMW, VW/Audi, Mercedes, GM, Ford, etc., will have to build more car factories in China until all car manufacturing in the world is in China. They can't let Volvo have a cost-of-manufacturing advantage with all their factories in China. LOL. Of course none of the above is going to happen.