Zhejiang Geely Holding Group, the parent company of Geely Automobile Holdings Ltd., wants to expand its product portfolio further and has set its sights on purchasing Chinese special vehicle maker Zhejiang Zhongyu Automobile Co.
Zhejiang Geely Holding Group is expected to sign a deal to buy Volvo from Ford Motor Co. in the first quarter and to close the deal in the second quarter.
So far, no financial details for the purchase of Zhongyu Auto have been announced. Zhongyu Auto is a small manufacturer in eastern China that makes premium special-purpose vehicles based on technology from Daimler AG.
This move is in line with China's goal to push consolidation and for a few national champions instead of the status of its current auto sector that is fragmented with more than 100 automakers. Zhongyu Auto is reported to have a planned capacity of only 25,000 vehicles a year.
This is quite small compared to Geely, China's 10th-largest automaker, which sold about 330,000 vehicles last year.
Geely said that it would make use of Zhongyu Auto's existing facilities and technology to develop its own premium passenger cars, multi-purpose vehicles and special-purpose vehicles.
The Chinese company revealed plans to also build a crash test center with initial investment of 350 million yuan ($51 million).