Manufacturing News

Geely plans to up Volvo production to rival Mercedes-Benz, BMW

Chinese carmaker Zhejiang Geely, which acquired luxury brand Volvo this year, plans to increase Volvo's production capacity to 600,000 units in the next three to five years so it can better compete with Mercedes-Benz and BMW, said Li Shufu, chairman of the Zhejiang Geely Holding Group.

Li said that Geely will definitely build some new Volvo factories in China. Otherwise, the acquisition of Volvo would be a pure financial investment. Only opening new factories in China can increase the capability of research and development personnel and promote the development of auto parts companies.

However, Li pointed out that Volvo is a completely independent international auto company, and in order to restore Volvo to the leading position it held in the 1970s and 1980s, the cars should be produced wherever they are sold. In other words, Volvo cars sold in Europe should be produced in Europe, and those sold in China should be produced in China.

In response to claims on the official Web site of Shanghai's Jiading District government that Volvo will build a factory in Jiading District, Li said that although Jiading has a strong wish for a Volvo factory to be built there, Volvo's executives and board members have not yet discussed it, and the site of the factory is still undecided.

Li denied the claim that Geely "married" Volvo and said the "brotherhood" between both companies was already established when Geely conducted research into the feasibility of the acquisition long ago. Geely will not simply move all of Volvo's production facilities to China. Instead, the company hopes Volvo can continue to be headquartered in Sweden.

According to Geely's half-year financial report, the company recorded revenue of over 9.2 billion yuan in the first half of 2010, up 55 percent from the same period of last year. Meanwhile, net profits that belong to the shareholders in Geely's wholly-owned listed company reached 804 million yuan, up 35 percent from last year, and the earnings per share reached over 0.1 yuan, up 22 percent from a year earlier.

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