China's Geely Sets Ambitious Goals for Volvo

China's Geely Sets Ambitious Goals for Volvo

China's Geely Holding Group Co., selected by Ford as the lead bidder for Volvo, has developed a turnaround plan for the money-losing Swedish brand that centers on China but also sets ambitious goals for sales in Volvo's traditional markets of Europe and North America, the Wall Street Journal reports.

Geely would add two or three larger, more luxurious models to Volvo's line in the next three to four years to boost global sales, sources told the Journal. New models would compete with the popular Audi A6, a symbol of success in China.

Geely expects to sell one million Volvo vehicles globally a year, a huge increase from the current 400,000. Geely would build a new Volvo plant in China with a 300,000-unit annual capacity to supplment the 600,000 units of annual capacity in Europe. Of the Chinese-built vehicles, Geely plans to sell 200,000 in China, a gigantic increase from the 12,600 Volvo vehicles sold last year.

Vehicle engineering would remain in Sweden.

Under the plan, Geely would finance the purchase of Volvo with about $2 billion raised from cash, bank loans and funds from some investors, including a government-owned fund and "a relatively well-known forieng investor," sources told the Journal. Ford paid $6.4 billion for Volvo in 1999.

Still, the sale of Volvo to Geely is far from done and is expected to be a lengthy, complicated process due largely to intellectual property issues, sources told the Journal. Ford and Volvo vehicles share substantial architectures and technology that will be challenging to unravel.

If and when the deal is sealed, however, it will the the largest such acquisition by a Chinese automaker.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.