Volvo Cars, the Swedish carmaker owned by Zhejiang Geely Holding Group Co, has won the approval of China’s main industry planner to begin making vehicles in the country, three people familiar with the matter said.
The National Development and Reform Commission recently authorized Volvo’s production plan, the people said, asking not to be named because the process is confidential. The State Council, China’s Cabinet, has to give final approval, though chances of rejection are negligible, said one of the people.
The approval is a long-awaited step for Geely Chairman Li Shufu, who bet he’d have an edge in his home country when he bought Volvo in 2010, only to find the Chinese government subjected the Swedish brand to the same regulatory procedures as all foreign automakers. Even Tata Motors Ltd’s Jaguar Land Rover, which set up a Chinese venture with Chery Automobile Co last year, took less time in gaining permission to manufacture cars in the country.
Still, the authorization paves the way for Geely to offer Volvo cars at cheaper prices because vehicles made in China aren’t subject to the nation’s 25 percent import duty. The government requires overseas automakers to work with Chinese firms in making cars.
Volvo’s sales in China rose 31 percent to 8,719 units in the first two months of the year, surpassing Sweden to become the carmaker’s second-largest market, behind only the US. Li said earlier this month that he was confident Geely’s sales growth would outperform that of the Chinese auto industry, which may expand 10 percent this year.
Volvo sells seven models in China, ranging from 249,900 yuan (US$40,200) for the C30 to 661,000 yuan for the C70 sedan, according to its website.
Volvo has said it is targeting to open its first Chinese manufacturing plant in Chengdu, capital of Sichuan Province.
Volvo last month appointed Lars Danielson as senior vice president for China operations.
Source: Shanghai Daily