* To develop technology for both companies
* Will keep brands separate
* Volvo biggest Chinese overseas auto investment
BEIJING/STOCKHOLM, Feb 20 Chinese car group
Geely and its Swedish brand Volvo will set up a joint
research and development centre in Sweden to produce technology
for new cars.
Geely chairman Li Shufu said the centre, based in Volvo's
western Swedish hometown of Gothenburg, would help Geely improve
the quality of its cars.
"However, the sharing of knowledge and technology has to be
done without jeopardising brand integrity and individual product
development," Li said.
Geely, whose investment in Volvo is the biggest Chinese
overseas auto investment, is stronger in the mass segment in
China, while the Volvo brand is aimed at the premium market.
Volvo has a had patchy record since Geely bought it from
Ford Motor Co in 2012. Sales rose in 2011, but a recession
in Europe and slowing sales in China pushed it into a loss for
the first half of last year.
Internal disagreements also led to the ouster of the chief
executive last year and to the appointment of Hakan Samuelsson
The new R&D centre will employ about 200 full-time engineers
from Sweden and China and develop a new modular architecture and
components for new cars in the compact car class.
The companies said the new centre would bring cost savings
in terms of development and economies of scale.
The head of the centre, Mats Fagerhag, did not go into
detail on a conference call, other than to say most of the
savings would likely come "on the material side", meaning Geely
and Volvo can share components and use Geely's supply chain in
China, where costs are cheaper.
Fagerhag said it was too early to say which components are
going to be shared.
Peter Mertens, senior vice president of R&D at Volvo Cars,
said on the call that the technology resulting from the joint
effort would yield differentiated platforms, with no compromise
in Volvo's higher safety requirements.