Volvo offers factories to Geely
The chief executive of Volvo Cars has offered its European factories to build vehicles for Chinese sibling brands Geely, Zeekr and Lynk & Co.
Hakan Samuelsson says it would give the three marques a faster, cheaper path into Europe than investing in new plants as stricter European Union rules loom.
Adding production in Europe also would help Geely avoid EU tariffs on Chinese-built EVs. The EU imposes an 18.8 per cent tariff on such imports on top of its baseline 10 per cent.
Samuelsson, pictured, believes tapping into Volvo’s production network will be the right choice for its three siblings, which up to April combined to sell almost 14,000 vehicles in Europe for a year-on-year jump of more than 300 per cent from 3,167.
“They would have a much shorter and a lower cost journey to enter Europe,” he told Automotive News Europe.
“They realise if they want to be serious in Europe, it’s not just exporting. They need a localisation strategy. They should talk with Volvo and see if they can utilise capacity we have.”
Volvo has factories in Torslanda in Sweden and Ghent, Belgium. A new plant is slated to open in Kosice, Slovakia, in 2027.
The Geely Auto Group has big plans for this year by forecasting sales outside of China of 750,000, up from a previous target of 640,000. The 2027 goal is for combined overseas sales of one million for Zeekr, Lynk & Co and Geely.
With the addition of Germany in March and France in April, Zeekr is now active in 16 European markets. Geely has recorded sales in 12 of the region’s markets, including Germany, Spain and the UK.
Another Geely Auto Group aim is to have a five per cent market share by 2030 in the “important” regions of Europe, South America, Central America and South-east Asia. To get there, it would need to sell 1.5 million units annually outside China.
Samuelsson mentions Volvo’s Belgium plant as a possibility where production of a sibling brand could happen, but only if Volvo can improve the competitiveness of the Ghent factory.
While Volvo welcomes building vehicles for Geely brands, as well as sharing more parts and technology with them, there are no plans to diminish the Swedish carmaker’s independence.
“Volvo is not going to be commanded into some structure. Volvo is one brand, Zeekr is one brand. Each brand should have its distinct, clear identity.”
At the same time, Samuelsson adds being part of Geely provides Volvo with benefits, such as the ability to add new-generation plug-in hybrids to its line-up without having to cover all the investment.
The bigger picture
BYD plans to start production at a new plant in Hungary this year, MG – a SAIC subsidiary – says it will establish its first assembly plant in Spain’s Galicia region and Chery is in advanced talks with Nissan to make cars at the latter’s factory in the UK, which has spare capacity.
In addition, former Volvo owner Ford Motor, which sold the former to Geely Holding for US$1.8 billion in 2010, is in discussions to sell an assembly hall at its facility in Valencia to Geely Auto, according to media reports in Spain. That said, Ford and Geely have declined to comment.
Chinese brands have been making deals at an accelerated pace to add production in Europe, where combined sales of their cars climbed by 97 per cent to 412,788 through to April. They are trying to secure factory space across the continent before new EU regulations go into effect which could make it far harder to invest.
