After numerous failed attempts to be recognized as a Chinese company by authorities, Swedish automaker Volvo has chosen to enter the market as a foreign investor. The delay in production, stemming from its identity issue, has now resolved. The first Chinese-made Volvo is expected to roll off the production line in 2013.
Almost 2 years after being fully acquired by Chinese auto company Geely in China, Volvo has now resolved an identity crisis that delayed its entry into Chinese production. According to chairman of Geely Group, Li Shufu, Volvo has submitted an application to form a joint-venture with its parent for equal shares in the new company. By accepting its foreign status, the Swedish Volvo can start its business in China.
Under Chinese Law, an overseas-registered company like Volvo has to retain its foreign status even after its acquisition by a Chinese company. That rule proved insurmountable, delaying plans to build three Volvo production plants on the main land.
The government says it will approve new foreign-invested auto industry projects only in cases where foreigners are willing to share their know-how.
Nearly two months after Geely and Volvo signed a technology transfer agreement in March, a car platform for Volvo’s SUV XC90 was said to be en route to a Geely factory as a sign of that goodwill.
The agreement between Geely and Volvo will allow the Chinese low-cost producer to upgrade its product portfolio by using technologies developed by the Swedish premium car brand. The platform could also support the development of a new model co-owned by the two.
Their joint-venture blueprint also promises a focus on cleaner-burning engines and other green technologies, including electric, hybrid and plug-in vehicles.
According to a five-year business plan released last year, the first Chinese-made Volvo is expected to roll off the production line in 2013. The brand’s annual sales will then reach 200,000 units by 2015. That would represent about 20 percent share of the premium car market in China.