Swedish premium carmaker Volvo is to share a manufacturing unit in China with father or mother Geely, the primary time that Chinese language and overseas marques can be made on the identical mainland manufacturing line.
Volvo’s smaller forty-collection mannequin and automobiles underneath Geely’s just lately launched mid-vary Lynk & Co model will probably be produced in a brand new facility being inbuilt Luqiao, 350km south of Shanghai, utilizing collectively developed compact modular structure.
The transfer to convey manufacturing underneath the identical roof is the newest step in efforts to tighten ties between Volvo and Geely by transferring European know-tips on how to Geely whereas sustaining the Swedish automaker’s enterprise and fame.
The Luqiao facility was introduced on Wednesday on the revealing of Volvo’s new China manufacturing technique, underneath which the corporate additionally outlined plans to maneuver manufacturing of the brand new S90 luxurious sedan from Sweden to China.
“With three crops — and the designation of 1 automotive line for every plant — Volvo creates an environment friendly manufacturing construction making certain future capability for progress,” stated Håkan Samuelsson, president and chief government.
Li Shufu, Geely chairman, has given Volvo lengthy rein and substantial monetary help to develop the model, whereas nurturing an extended-time period plan to improve Geely’s technical prowess by means of a analysis and design centre in Sweden, the place engineers from each corporations work aspect by aspect.
Mr Li described his strategy as a slicker various to the outdated mode of cooperation the place worldwide automakers construct and promote their marques in China, whereas a home companion offers market entry and a manufacturing facility in a 50-50 three way partnership.
“We have now made China our second house market,” stated Lars Danielson, senior vice chairman for Volvo Asia Pacific. “We’ll leverage our benefit of being one firm slightly than a three way partnership.”
Mr Li can also be amongst a rising contingent of Chinese language executives and coverage makers who say the 50 per cent shareholder restrict is stopping the Chinese language auto business from shifting up the worth chain and launching globally aggressive marques.
Critics argue that as an alternative of permitting a gradual switch of experience, as initially deliberate, the laws have made China’s largest automakers over-reliant on the sale of worthwhile JV-branded automobiles and deters them from taking dangers to launch and develop their very own manufacturers.
The launch of Geely’s worldwide mid-vary model Lynk & Co in Berlin in mid-October was a leap for a corporation that started off as an extremely low-value carmaker, with Mr Li as soon as claiming Geely would promote the most cost effective automobiles ever made.
However the newest part of Volvo’s integration with Geely can also imply the Swedish model finds itself competing for gross sales with automobiles produced beneath its personal roof.
China gross sales have been a serious drive in Volvo’s restoration from years of poor efficiency underneath Ford. Gross sales have tripled over the previous three years, making China Volvo’s largest single-nation market.
Volvo bought greater than sixty three,000 automobiles in China within the first 9 months of 2016, up from fifty seven,000 in the identical interval final yr.
Its manufacturing has turn into more and more China-centric and in 2015 Volvo turned the primary carmaker to export Chinese language-made automobiles to the US, from its Chengdu facility.