HONG KONG Nov 11 China's Zhejiang Geely Holding
Group, vying to buy Ford Motor's (F.N) loss-making Volvo unit,
has developed a turnaround plan under which it hopes to double
Volvo's sales to near 1 million vehicles a year, media reported
Under the plan, Geely would build a new Volvo plant in China
with annual capacity of 300,000 vehicles a year to draw on
China's market potential and inexpensive labour, the Wall Street
Journal reported, quoting a source close to Geely.
Its Hong Kong listed unit, Geely Automobile Holdings Ltd
(0175.HK), would also add two or three bigger, more luxurious
cars to Volvo's lineup over the next three to four years, which
it hopes would boost global sales, the source said.
But for now it is planning to cede more sophisticated
engineering to Volvo's Swedish operations, an aspect of the plan
that could help allay fears of lost jobs in Sweden.
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, compared with recent annual sales of around 400,000
However, Geely executives see a long slog to seal the deal
roughly worth $2 billion, a process complicated by
intellectual-property issues, according to the Journal report.
At issue, the source said, are what technology Ford would
transfer to Geely, how Ford would continue to use Volvo
technology and how the two companies would handle any possible
disputes over technology down the road.
Last month, Ford officially named Geely Holding Group as
preferred bidder for Volvo, in what could lead to the biggest
overseas acquisition by China's fast growing auto sector.
(Reporting by Alison Leung; Editing by Jonathan Hopfner)