Volvo: Brighter future after merger

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Geely's expected merger with Volvo will not hamper but boost China operations by the Swedish premium carmaker, according to Volvo's top China executive.

"The merger will not change Volvo's plans in China. Instead, it will enhance them," said Alexander Klose, chief executive officer of Volvo Cars China, at a press briefing last week in Beijing,

Klose said Volvo will focus on the Chinese market by putting in more investment after the deal with current owner Ford Motor Co is complete.

Another major positive for the Swedish brand is that "Chinese authorities will lend support to Volvo as they have chosen the auto industry as a key sector for the economy", he said.

Volvo will have the same brand direction after the merger and Geely will not sacrifice the quality of Volvo cars for short-term cost savings, he said.

Klose added that Geely would possibly register a company in Beijing to own Volvo.

In December, Geely and Ford announced they expect to sign a final agreement on sale of Volvo.

Klose did not reveal details about the deal, noting that he is "not a part of negotiations".

Volvo sold 22,405 cars in China last year, surging 77 percent from 2008, making it one of the fastest-growing mainstream premium brands in the world's biggest vehicle market. In 2009, segment leaders Audi and BMW moved almost 160,000 and more than 90,000 cars in China respectively.

Volvo's compact S40 and large-sized S80 are being made at Ford's joint venture in China with Chang'an Motor Corp and Japan's Mazda Motor Corp.

"We will carry out localizing additional cars in China," Klose said, without revealing details.

Volvo's long-term strategy is to build cars in China that are also exported to other countries, he said.

The company said it will import its renovated C30 and C70 to China in the first quarter of this year.

An all-new S60 sedan, which is to debut at the Geneva motor show in March, is also expected to be brought into China later this year.

Klose said Volvo will continue to expand its sales network in China to propel sales and will further penetrate into second and third-tier cities like its competitors.

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The brand now has 91 authorized dealerships in 78 cities across the nation. Klose said there is huge growth potential for the luxury car segment in China, so Volvo is "bound to be" one of the leading brands.

The premium segment now comprises just 3 percent of the overall car market in China, far below the ratio in mature markets.

"As China moves on to strengthen economically, this share will continue to grow. The premium segment should grow more proportionally, giving Volvo an additional boost," he said.

He added Volvo is becoming more passionate than ever with "great design, handling and fun to drive" in its new products, which he said will more than ever appeal to Chinese consumers.

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