Geely to Build Volvo Plant in China

The ink hasn't even completely dried on the purchase contract for Volvo signed between the Chinese and American manufacturer Ford and Geely is already thinking big.

With its sights set on making Volvo a hit in China, Geely announced it is gearing up to build a huge Volvo facility in Shanghai, on the same grounds where the company's headquarters will be located.

"We have reached an agreement with Geely on the matter and will provide a series of favourable policies for producing Volvo cars," Yu Jianhua, deputy director of the Jiading Industrial Zone and Asset Management Committee told asiaone.com.

According to the authorities, Geely will build a plant with a capacity of no less than 300,000 vehicles. The facility will manufacture the C30 and the V70 starting 2012. By the end of 2010, Geely would have already hired 200 to 300 engineers to work at its temporary research and development center in the area.

Although the announcement was made by the district of Jiading authorities, it has not yet been confirmed by Geely officials.

"First, Volvo management will say what it wants and then it is up to the board," Ning Shuyong, a spokesperson for Volvo told news agency TT. "There is still no decision on whether plant will be located in Jiading."

"I cannot say anything about the timetable before the factory is established."

Geely completed the Volvo purchase in the beginning of this month, having paid $1.3 billion in cash to the American manufacturer. Ford will continue to cooperate with Volvo and supply it with powertrains, stampings and other vehicle components.