Zhejiang Geely Holding Group, vying to buy Ford Motor’s Volvo division, plans to more than double Volvo’s sales to near 1 million vehicles a year by 2013, media reported earlier this week.
Under the plan, Geely will build a new Volvo plant in China with annual capacity of 300,000 vehicles to draw on China’s market potential and inexpensive labor. Geely will also use Volvo’s manufacturing capacity fully in Europe to sell 600,000 vehicles there and in North America.
Geely’s Hong Kong-listed unit, Geely Automobile Holdings Ltd, will add two or three bigger, more luxurious car models to Volvo’s lineup over the next three to four years, which it hopes would boost global sales, the Wall Street Journal reported, quoting a source close to Geely.
Geely believes Volvo has the potential to sell 200,000 cars a year in China, up from 12,600 vehicles last year. It forecasts selling nearly 1 million cars a year globally within four or five years, from recent annual sales of around 400,000 vehicles.
However, Geely executives face a long uphill journey to seal the deal roughly worth $2 billion, a process complicated by intellectual-property issues, according to Reuters.
Ford has officially named Geely Holding Group as preferred bidder for Volvo, a move that may lead to the biggest overseas acquisition by China’s fast growing auto sector.