Chinese Volvos show new direction for brand

Cars built jointly by Geely and Volvo will be aimed primarily at the US and Europe but could expand later to right-hand drive markets including Australia. Three years after being bought by privately-owned Chinese carmaker Zhejiang Geely Holding Group, Volvo has been allowed by the government to build cars in China. It will now assemble cars in two factories and build engines in another.

Geely CEO Gui Shengyue previously said the Geely and Volvo brands would be kept separate so any association with China would not diminish the Swedish company's image. But now he says the ownership of Volvo has enhanced Geely's image to international markets.

Mr Gui says Geely aims to have up to 60 per cent of its sales coming from overseas by 2018. It will add a new SUV model in China next year that could be exported. Geely wants to become China's biggest vehicle exporter this year with a target of 180,000 units. It sold 100,800 vehicles abroad last year, second to Chery's 184,800 units, according to the China Association of Automobile Manufacturers.

Volvo Car Australia spokesman Oliver Peagam says there is no plan to import Chinese-made Volvos. He says that, at the moment, Geely and Volvo are treated as separate companies. Geely's national distributor is WA-based John Hughes Group that last month halted imports of the Geely EC-7 because it failed to obtain a minimum four-star crash test result.

The group plans to import a new Geely sedan model within 18 months. Moves by Geely to build a joint, export-oriented vehicle with Volvo in China is shared with other Chinese car makers as they look offshore to build sales.

They face increasing competition in their home market and may also contend with a proposed government rule to amalgamate vehicle manufacturers, reducing the numbers from the current 174 companies. They have a planned capacity to make 40 million vehicles by 2015, outstripping the projected domestic demand of about 27 million, according to the government planning agency, National Development and Reform Commission.

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