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China to back Geely purchase of Volvo

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China to back Geely purchase of Volvo
10:25 CET+01:00
The Chinese government will support the sale of Swedish automaker Volvo to Geely Automobile, the company said on Thursday.

Gui Shengyue, Geely Automobile's executive director, said its parent initially planned to develop Geely Automobile and Volvo as separate brands.

He said Geely will look at ways to collaborate with Volvo once its parent group completes the acquisition of the loss-making Swedish brand from US auto giant Ford.

"But when the timing is right, we will find a suitable point of collaboration," he said during a press conference in Hong Kong.

Gui said the acquisition had the backing of the Chinese government and was expected to be completed in the first quarter of 2010.

Injecting the Volvo operation into Geely Automobile remains parent Geely Group's ultimate goal, Dow Jones Newswires quoted Gui as saying.

Geely Automobile would consider supporting Volvo on strategic development and financing, he also said.

Zhejiang-based Geely Group, one of China's largest private carmakers, and Ford announced last week they had agreed on the main terms of Volvo's sale.

Overseas demand would support the long-term growth of China's auto industry, Gui said.

"The automobile industry in the domestic market will continue to grow in the next two years. After that, its growth will mainly come from its overseas markets."

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