Acquiring the Volvo brand is both a huge challenge and a wonderful opportunity. Li Shufu, the chairman of China's Zhejiang Geely Holding Group, has a lot on his plate as he attempts to make the Volvo brand profitable once again. But definitely, a huge plus that Li will get is the opportunity to use Volvo to boost sales in China, which has replaced the US as the world's largest car market.
Major carmakers, such as General Motors Co. and Toyota Motor Corp., have been glad to have the huge market in China during the financial downturn.
John Zeng, an analyst with IHS Global Insight, said that China is the "crucial market' as Li attempts to turn around Volvo.
Zeng said that if Li can make Volvo profitable in China then that would make up for the losses in European operations and keep them running. Currently, the Europe and the US market are not feasible to revive Volvo.
Geely aims to follow in the global success of its Asian neighbors and to one day, be ranked alongside Japanese and Korean players like Toyota, Honda Motor Co. and Hyundai Motor Co.
Analysts said that Geely, which is known more for producing compact and affordable cars, will benefit from owning a global brand like Volvo in order to build up its reputation in China. It also wants to catch up with its larger state-owned rivals, who have affiliated with GM and Volkswagen.