VOLVO invests RMB 12.1b in Geely

The approval of the third Volvo base faces a countdown. Reporters learn that the “V auto project” base located in Luqiao, Taizhou, will be the third domestic base of Volvo, after Daqing and Chengdu.

The construction of Taizhou base was started last year, which will mainly produce “L” series new brand models based on the CMA platform, by Geely and Volvo together. Once the base obtains approval for the production of Volvo brand models, Volvo will share the same line with Geely to produce vehicles. The cooperation between Geely and Volvo will be further deepened.

Public data shows that the “V auto project” are jointly invested by Shanghai Volvo headquarter, Geely Hong Kong and Geely Holding Group. The completion of the project, with a total investment of RMB 12.1b and annual capacity of 200,000 units, will declare the operation of Volvo’s third factory in China.

Volvo has a sales volume of 40,700 units in China in the first half of year, increasing 6.3%. But compared with its 800,000 units’ global target in 2020 and strong opponents “ABB”, Volvo’s performance still needs further improvements.

Volvo intends to adopt a diversified competition strategy with opponents. The CMA compact vehicle platform, may meet Volvo’s need in compact vehicles to seize the market. However, the launching of small-size vehicles at a time when ABB have seized the market seems to be helpless. Therefore, Volvo has to cut costs and launch a competitive model. The “L” series brands, which are targeted at joint-venture brands such as Volkswagen and Toyota, are just such products. The sharing production line based on CMA platform makes cutting costs and diversified brands at the same time. For example, 50%-60% of auto parts are shared by “L” brands and Volvo brands while the remaining 40%-50% parts are used differently by the brands. In this way, Volvo would keep its luxury with a lowering price.

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