Volvo Cars and majority shareholder Zhejiang Geely Holding Group Co. will enter into a vehicle manufacturing venture in line with the plans to expand in China, which is the largest automobile market in the world. Volvo will disclose the "concrete details" of the joint venture in around two months, the automaker's Beijing-based spokesman Michael Ning stated.
In accordance with the requirements for a Chinese joint venture on automobile manufacturing, Volvo will also launch a new brand exclusive to China as well as more fuel-efficient vehicles, Ning added. Under the present regulations, Volvo is considered a foreign automaker even if it is wholly owned by Chinese interests, Ning explained. He added that Volvo also requires a local partner before it can manufacture vehicles in the country.
Ning disclosed that Volvo is waiting for the National Development and Reform Commission's approval of a proposed facility in the southwestern city of Chengdu. The automaker is aiming to double sales to 800,000 vehicles worldwide in a decade through 2020. The automaker also intends to spend at most $11 billion around the world in the next five years in order to meet increasing demand in markets such as China, Volvo CEO Stefan Jacoby stated in February 2011.
In August 2010, a Chinese consortium including carmaker Zhejiang Geely purchased Volvo for $1.8 billion from Ford Motor Co. The sale completed the largest overseas acquisition by a China-based automaker. Zhejiang Geely has 51 percent share of Volvo. Meanwhile, the Chinese province of Daqing has 37 percent while the Jiading province has 12 percent.
Volvo's Chinese operations chief, Freeman Shen, disclosed in an interview in June that the automaker is studying an additional manufacturing facility and engine plant in China to its proposed Chengdu factory. Foreign vehicle manufacturers are expanding in China, where lower vehicle-ownership levels and rising wealth aided the country to outperform the U.S. as the largest vehicle market in 2009.