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Volvo Cars to share engine technology and more with parent Geely: sources, Reuters

Volvo Cars to share engine technology and more with parent Geely: sources

BEIJING (Reuters) – Sweden`s Volvo Cars, a unit of Zhejiang Geely Holding Group, has agreed to make some engines available for Geely-branded vehicles, sources said, deepening ties inbetween the carmakers who already share technology through third brand Lynk & Co.

Three people close to Geely and Volvo said the very first Volvo-powered Geely model was expected to hit the market as early as late next year as a two thousand nineteen model year car.

The car will be tooled with a fresh 1.5-liter turbo charged gasoline engine which Volvo has been developing for smaller cars, the knowledgeable individuals said.

Volvo is expected to share a Two.0-liter turbo-charged engine at a later date and will also permit Geely-branded cars to use a common vehicle platform the two automakers developed jointly for Volvo and Lynk & Co.

«The terms of the recently announced joint venture inbetween Volvo Cars and Geely Group mean that existing and future technologies can be collective by Volvo, Geely Auto and Lynk & Co, under license agreements,» a Volvo spokesman said.

As part of this deepened technology-sharing arrangement, Geely on Friday said it has ended the formation of a joint-venture with Volvo, called GV Automobile Technology Co, to «cooperate on automotive technologies, purchasing and the future development of» Lynk & Co, Geely said in a press release.

The fresh joint venture creates a platform where all three brands – Geely, Volvo and Lynk & Co – can formally share the technologies and know-how they jointly develop and collaborate in purchasing, a Geely spokesman said.

Analysts questioned Geely`s capability to absorb the best of Volvo when it acquired the automaker from Ford Motor Co almost seven years ago. Yet Geely has been working progressively to improve its technology with Volvo know-how.

Better designed cars following its two thousand ten purchase of Volvo – such as its GC9 sedan and Boyue sport-utility vehicle – have helped lift Geely`s fortunes. Its China sales grew fifty percent last year to 766,000 vehicles and it expects sales to climb well above the one million mark this year.

Ultimately, it aspires to sell more outside China.

Earlier this year, Geely bought 49.9 percent of fighting Malaysian carmaker Proton from conglomerate DRB-HICOM Bhd. Geely officials have told Reuters the Hangzhou automaker is planning to improve Proton cars by sharing Geely and Volvo technologies.

Analysts have said one big risk for Volvo, as it combines more with its parent, is the dilution of Volvo`s brand photo by sharing its technology and know-how with a Chinese auto upstart.

Volvo Chief Executive Hakan Samuelsson said the key was to differentiate the brand adequately – even if the two groups share more technology. For Volvo, that is about more and better safety equipment, among other aspects.

«The progress Geely has been able to make in improving products and brand photo over the past several years makes me feel more certain they can execute this process successfully,» Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, said.

Last month Geely and Volvo said they plan to go beyond Lynk & Co and create a joint venture to share technology, such as vehicle architecture and engines via cross licensing arrangements managed by that joint venture.

Samuelsson told Reuters last month the deal would provide Volvo with greater development resources and efficiency in purchasing parts. It also should help Volvo speed up introduction of fresh technology in areas such as components for electrified vehicles, he said.

Reporting by Norihiko Shirouzu; Editing by Clara Ferreira-Marques and Stephen Coates

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