Geely Aiming to Set Up Chinese Plant for Volvo

If the deal between Geely and Volvo goes through, the Chinese carmaker has fairly ambitious plans for the Swedish brand, especially in the domestic market. A report rolled out by the Wall Street Journal reveals that Geely wants to offer around $2 billion for Volvo, with the money coming from its own resources, bank loans and various fund sources. A foreign investor is reportedly involved in the talks, but no specific details are available at this point.

Just as expected, Geely would attempt to expand Volvo locally so, as part of its plans, it intends to build a new production facility in China that would roll out around 300,000 cars per year.

Geely hopes to sell around 200,000 cars a year in China, compare to only 12,600 vehicles in 2008. And the optimistic forecasts don't stop here. The aforementioned source notes that Geely wants to raise its global sales to one million cars a year within four or five years, up from 400,000 units in 2008.

The European infrastructure would be used at full capacity if Geely manages to buy Volvo, helping the Chinese manufacturer deliver a total of 600,000 cars in both Europe and North America.

Ford confirmed in late October that Geely is in pole-position to buy Volvo and revealed that officials of the two companies are now involved in deep takeover negotiations.

“Ford’s objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties,” said Lewis Booth, Ford Motor Company executive vice president and chief financial officer. “Any prospective sale would have to ensure that Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement our core ONE Ford strategy."