China's Geely gears up for Europe, US expansion with new car platform

Mainland carmaker to use modular platform developed with Volvo to produce small utility vehicles for sale in Europe and US markets

PUBLISHED : Friday, 17 April, 2015, 8:55pm
UPDATED : Friday, 17 April, 2015, 11:59pm

Geely is set to start producing a small crossover utility vehicle late next year - the first car to be built using a common platform jointly developed with Volvo.

The car - yet to be named - will hit showrooms in China in early 2017, several European markets a year or so later, and eventually the United States, said two senior executives, one of whom recently left the Chinese group.

The new car will be based on a common platform called compact modular architecture (CMA) and engine technology that Zhejiang Geely Holding Group has developed with Volvo Cars, the struggling Swedish carmaker it bought from Ford Motor nearly five years ago.

Geely's cooperation with Volvo, a storied brand best known for its focus on safety, is seen as a possible model for Chinese companies trying to digest and manage acquired consumer brands.

When Geely chairman Li Shufu pounced on Volvo, many doubted that a relative newcomer could turn around the loss-making, 87-year-old company while protecting its more upmarket brand.

"With the CMA car, Li wants to tell the world we're ready for the big time. We're ready to break into Europe and the US," said one of the individuals.

Geely, which also owns black cab maker London Taxi, is building an assembly plant in China, which will eventually have the capacity to produce 150,000 CMA-based vehicles a year for Geely and Volvo.

For export to Europe, the new plant's CMA-based small crossover SUV will initially be an alternative-fuel version.

In China, Geely plans to sell a petrol-engine version from early 2017, followed by a couple of alternative fuel variants, such as plug-in hybrids.

In targeting Europe with an alternative-fuel model, Geely wanted to be seen as a maker of affordable high-technology cars rather than just another cheap, no-frills Chinese brand, the executives said, adding the company planned a limited number of flagship showrooms in Europe.

"It's an effort to burnish our brand before we bring out more mainstream petrol-fuelled cars to Europe and eventually to the US," one of them said.

For now, Geely plans to sell the new car in Spain, Portugal, Italy, Britain and eastern Europe.

"Those markets, Britain in particular, are open to foreign cars, while northern Europe, France and Germany are not," the executive said.

Geely plans to unveil the crossover at next year's Geneva or Beijing car show.

The new car will not be the first Geely has co-developed with Volvo, although it will pioneer CMA. Geely recently launched its GC9 sedan in China, and is targeting emerging markets rather than Europe and the US.

Volvo, meanwhile, plans to use the CMA platform to upgrade its small vehicles, producing them at the new China assembly plant and in Europe.

Buying Volvo has been a bold gamble for Li, who a decade ago proclaimed that cars were "nothing more than four wheels and two nice comfy sofas". He has since recognised there is more to it than that, and has overcome early Swedish reluctance to cooperate too closely for fear of diluting the Volvo brand.

In 2012, Geely brought in Carl-Peter Forster, an industry veteran with spells at BMW, General Motors and Tata Motors, in part to help convince Volvo chiefs to transfer some retired technologies and jointly develop the basics that will underpin a range of small cars, one of the two executives said.

The two firms agreed to set up a joint technical centre in the Swedish city of Gothenburg to develop common small-car platform and powertrain technologies. Geely also beefed up its expertise by hiring Volvo engineers and designers.

The scalable CMA platform can be stretched to accommodate bigger medium-sized cars, and will allow Geely to revamp most of its product line-up, including its Emgrand series. It will also help Geely plan the kind of bigger models it will need to attract buyers in the US.

"We have had discussions with Volvo to see whether we could build a factory in the US to assemble cars together," one of the individuals said.