Report: Volvo Enters Tech-Sharing Agreement With Chinese Owner

In what was likely one of the key factors sealing Volvo’s sale to Chinese automaker Geely from Ford in 2010, the parent company is poised to take advantage of the Swedish automaker’s technological expertise, thanks to a recently-announced technology sharing agreement.

According to Reuters, the deal would allow Volvo and Geely to jointly develop electric vehicle and small-car technology, including plug-in vehicles. Volvo recently unveiled the XC60 plug-in at the 2012 Detroit show, and also said the car was developed specifically for the American and Chinese markets. China seems to be on every automaker’s list, as the country continues to rapidly rise in the automotive market, and Volvo CEO Stefan Jacoby thinks no differently.

“This [deal] is an initiative which is set to create additional value for both companies. It will support us in realizing the aspirations to make China our second home market,” he said.

Although Jacoby expressed his motive for the accepting the deal, some may feel as though the Chinese company will reap most of the benefits, and possibly tarnish the Swedish automaker’s premier brand status by putting its high-tech gadgetry in Geely’s low-cost cars. Reuters also reports that industry observers warn about “operational difficulties” in executing the plan.

For now, it seems as though Geely and Volvo are sticking to the plan. Volvo is also currently waiting for approval from the Chinese government to build a manufacturing plant in Chengdu in southwest China, which is slated to build an as-yet unnamed new brand formed through the Geely-Volvo joint venture.

Source: Reuters