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China’s Geely to buy Volvo Cars: report

Chinese automaker Geely has reached an initial agreement with Ford for the purchase of Volvo Cars, according to Chinese media reports.

China's Geely to buy Volvo Cars: report

Citing a report published on Wednesday in the National Business Daily, the Shanghai Daily newspaper reported on Thursday that Geely Automotive Holdings plans to buy Volvo and produce a new model of the traditional Swedish brand in China’s Guangzhou Province.

As a part of the deal, Geely plans to start production of the new Volvo XC90 in Dongguan City in what is seen as a major step forward in the Chinese company’s bid to expand into the global auto market.

Terms of the deal were not disclosed, but Jia Xinguang, an analyst with the Chinese National Automotive Industry Consulting and Development Corporation reckons that Volvo would not be sold for less than $3 billion, the Shanghai Daily reports.

Ford purchased Volvo Cars in 1999 for around $6.5 billion.

Geely representatives were not available for comment, according to the Shanghai Daily.

A Volvo spokesperson told the TT news agency on Thursday that the company had no knowledge of any agreement to sell the Swedish automaker to Geely.

“Ford is in charge of the sale. We don’t know anything here,” said Volvo’s Maria Bohlin.

Greely Deputy CEO Daniel Dai also denied the report, telling Sveriges Radio (SR) that his company is too small to buy Volvo Cars.

According to Dai, the information about the alleged deal is mere speculation.

“We’ve already said three times previously that we aren’t involved in this project,” he told SR.

John Gardiner, a spokesperson for Ford Europe’s based in Germany also dismissed the rumours.

“This is just speculation from the market. We neither confirm nor deny these speculations,” he told the TT news agency.

“We continue to discuss Volvo’s future with a number of interested parties.”

However Gardiner refused to name any potential buyers or say how many had a continued interested in purchasing Volvo.

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CARS

Volvo stays in fast lane despite China dip

Swedish automaker Volvo Cars, owned by China's Geely, reported Wednesday a rise in first half profits even as sales tumbled in its biggest market, China.

Volvo stays in fast lane despite China dip
Volvo Cars' Swedish chief executive, Håkan Samuelsson. Photo: Bertil Ericson/TT

Note: An earlier version of this story said that first-half profits fell. While net profit attributable to shareholders indeed fell, overall net profits were up. The story has been amended to reflect this.

Net profit more than tripled to 877 million kronor (92 million euros, $56 million), while turnover climbed by 12 percent to 75.2 billion kronor.

Operating profit surged by more than 70 percent to 1.66 billion kronor, thanks to a strong US currency and robust sales of Volvo's SUV model XC60.

But net income attributable to owners of the parent company dropped by 60 percent to 173 million kronor (18 million euros, $20 million).

Volvo's overall car sales in terms of units rose by 1.4 percent to 232,284 during the first half.

The strongest sales growth was registered in Sweden and western Europe, while they remained stable in the United States and declined in China, by 1.2 percent, and the rest of the world, including Russia.

Volvo went through several dark years before returning to profit in 2013. In 2014, it beat its sales record from 2007, selling almost 466,000 vehicles. CEO Hakan Samuelsson told Swedish news agency TT the company expects to sell 500,000 cars this year.

The number of Volvo employees has risen by 10 percent in the past year, to 28,000 worldwide.

Despite its economic slowdown, Volvo plans to boost its presence in China and has acquired 50 percent of three joint ventures from parent company Geely: two assembly plants and one research and development centre.

Geely paid $1.8 billion to buy Volvo from US carmaker Ford in 2010.