Geely to build large Volvo factory in China

The official website of the district of Jiading in Shanghai has announced that Volvo has decided to set up its Chinese headquarters and factory in the municipality.

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However, according to Geely and Volvo, the announcement is premature and a decision has not yet been made.

"First, Volvo management will say what it wants and then it is up to the board," said Ning Shuyong, who has been a spokesperson for Volvo at Geely since July 1st. "There is still no decision on whether plant will be located in Jiading."

Ning is also the assistant of Li Shufu, the chairman of Volvo Car and Geely.

"I cannot say anything about the timetable before the factory is established," Ning told news agency TT.

He also did not confirm details of how large a future Volvo factory in China would be or what models would be manufactured there. Volvo emphasised that nothing is clear.

"The decision will be made here and by the board," said Volvo's information director Olle Axelson. "It will probably be in the autumn."

Volvo's new CEO Stefan Jacoby, who started in his new position on Monday, needs more time to determine the best location for a Chinese establishment, according to Axelson.

"He does not shoot from the hip and will not decide such a thing so quickly," said Axelson. "We are not ready to look at all parameters. Jiading is a good option, but it is a complex issue."

According to reports in China's state-run People's Daily and Oriental Morning Post, the factory will cover 800,000 square metres and essentially build the C30 and V70 series of vehicles.

Construction is expected to be completed in the second half of 2012. The capacity at the new factory in Jiading is slightly larger than Volvo's "home factory" in Torslanda outside of Gothenburg in western Sweden.

In the last two years, Volvo has already built 300,000 cars in China, according to reports. The news about the construction of the new plant in China comes only two weeks after Ford's settlement with Geely was totally approved.

Previous reports on Volvo's plans in China had said that it would sell 150,000 cars a year by 2015, half the capacity of what the new plant is capable. Volvo sold 15,497 cars in the country in the first half of this year, up 88 percent from the same period in 2009.