Geely and Volvo Jointly Approved Li Shufu finally "married himself"

Li Shufu finally realized his marriage to himself. Volvo Cars disclosed recently that the localization of Volvo Cars has been formally approved by the Chinese government. As a precondition for localization, Geely Holding and its wholly-owned subsidiary, Volvo Cars, formed a joint venture company. The approval of this project took three years longer. This has become a unique case of the Chinese automobile joint venture company.

Four bases for the national layout

In accordance with the approved localization plan, Volvo Cars will establish a vehicle manufacturing base in Daqing, Zhangjiakou to establish an engine manufacturing base, Shanghai to establish a Chinese R&D base, and to establish a vehicle manufacturing base in Chengdu.

In accordance with the relevant policies of the Chinese automobile industry, Volvo Car Group and its parent company, Geely Holding Group, set up joint ventures as joint ventures, of which Volvo Car Group holds 30% of the shares, and Geely Holding holds 70% of the controlling share. After approval, two plants in Daqing and Zhangjiakou were operated as joint ventures. The Chengdu plant currently operates under the qualification of Zhejiang Haoqing Automobile Manufacturing Co., Ltd., a subsidiary of Geely Holding Group, and has been approved in June.

In the past three years of the marathon approval process, Geely and Volvo achieved some unconventional construction of the production base through some compromises. For example, the Chengdu factory borrowed the loyalty of production. According to reports, the Daqing plant will begin trial production before the end of 2013; the Zhangjiakou plant will be put into operation this fall, providing engines for the Chengdu and Daqing factories; and the Chengdu plant will be put into trial production in the second half of 2013. Volvo Cars stressed that “all three Chinese factories will strictly abide by Volvo Cars' global procurement, global quality control, R&D system and management standards, and produce quality products of the same quality as European factories.”

It is understood that the Volvo Chengdu base will be built with an annual production capacity of 125,000. The first domestic model will be the medium-sized sedan S60L, which will soon be offline. According to the EIA information previously disclosed by the Ministry of Environmental Protection, Volvo Daqing Base will have a production capacity of approximately 80,000 vehicles and will produce three models: the luxury family sedan 113K, the mid- to high-end SUVXC60 and the MPV.

Localization will speed up the market

Three years ago, Geely successfully acquired Volvo. However, Volvo is still listed as a foreign enterprise. According to the policy, it is necessary to set up a joint venture company before it can be made domestically. Geely and Volvo Car Chairman Li Shufu once ridiculed: "The so-called 'joint venture' means that I am married to myself, because the two parties to the cooperation are all signed by me. I married myself and signed a contract with myself, myself and myself. Joint venture. I think it is quite funny.” This approval is even more time-consuming than other automotive projects. It was eventually approved through the State Council executive meeting and became a unique case of a car joint venture project.

Volvo plans to reach the target of 200,000 sales and 20% luxury car market share in China by 2016. The timely landing of localization projects is undoubtedly crucial to the realization of this Chinese strategy. After experiencing a decline in sales last year, Volvo has launched a number of new vehicles in China this year and has achieved strong sales growth. In the first seven months of this year, Volvo sold 33,000 vehicles in China, a substantial increase of 37.5% over the same period of last year. At present, China has become Volvo's second largest market. However, to achieve the goal of producing 200,000 vehicles a year, Volvo still needs to hurry up, especially to launch more competitive domestic models to accelerate sales.

Cooperation with Geely will export

As an automotive joint venture company, Geely Volvo will also strictly follow the industrial policy to develop new energy vehicles and joint ventures with its own branded products. Previously, Volvo has transferred part of its technology to Geely Automobile and achieved joint research and development. Thanks to this, Geely Automobile will be able to create a new high-end brand in the future. This brand will be included in Geely Automobile's name and not as a joint venture company's own brand.

Geely Automobile CEO Gui Shengyue recently disclosed to the media that the new car jointly developed by Geely and Volvo will be released in 2015. “We have entered the actual research and development stage, and we expect to see new products come out later in the year.” He also said that this A jointly developed model will be used to open up the US and European markets and achieve a breakthrough in international strategy.

In the field of new energy vehicles, Geely and Volvo will also realize the integration of R&D resources. In Volvo China's layout design, the Volvo Car R&D base in Shanghai will carry out the design, research and development of electric vehicles and new energy vehicles. The EC7 pure electric vehicle that Geely will launch soon also borrows the technical advantages of Volvo's C30 pure electric vehicle and will be listed at the same time both at home and abroad in the first quarter of 2014.

Li Shufu had previously described that in response to fierce market competition, Geely Group has established an international team to promote the cross-brand modular platform strategy to a new height. This platform needs to have the level of a world-leading luxury brand like Volvo, and Geely Automobile can develop first-rate quality products on this platform to meet the needs of a wider range of users. This practice is also in line with the international practice of jointly developing different brands under the same group. Under the joint R&D model, Volvo Cars will continue to focus on the global luxury car market, while Geely Automobile is still focusing on the Volkswagen market.

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