Ningbo-based Geely turned heads around the world when it recently announced the USD2 billion purchase of Volvo. Why, analysts, wondered purchase a car brand that GM was so desperate to offload?
GM’s financial woes aside, Geely was assumed to be using the purchase as a springboard to greater visibility – and sales – in the global auto market. That may have formed part of the planning, but another interesting factor has also emerged.
State media reports that Geely plans to double Volvo’s annual car output by building a new factory in Beijing, as it seeks to turn the Swedish-born car brand into a profitable entity by 2011. By producing up to 300,000 Volvo cars, Geely hopes to install Volvo on the Chinese government’s approved list of cars for official purchasing. That could prove to be a lucrative move for Geely, which has openly admitted strong governmental support for its Volvo purchase bid.
Meanwhile, Shanghai Automotive Industry Corp (SAIC), a joint-venture partner of both GM and Volkswagen, has announced plans to double the output of its own-branded cars – to 180,000 vehicles this year, according to comments made by company chairman Hu Maoyuan at the World Economic Forum in Davos.
SAIC purchased the rights to collapsed UK car manufacturer Rover back in 2006, and now sells a range of cars, called Roewe, closely based on Rover technologies and insignia.
With China having set its domestic automakers the task of producing 50 per cent of passenger vehicles sold in the country by 2015, this promises to be another headline-grabbing year for car manufacturing in China.
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