Operation "L": China's Geely to launch new car brand - sources

Wed Apr 13, 2016 7:25pm EDT
 
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By Jake Spring

BEIJING (Reuters) - Chinese automaker Geely will launch a new brand next year, codenamed "L", with cars based on joint architecture developed with Volvo, three people with knowledge of the matter told Reuters.

The brand will launch with a sport-utility vehicle - the first model based on the Compact Modular Architecture (CMA) platform developed by Zhejiang Geely Holding Group (0175.HK: Quote) and Volvo, the Swedish automaker it bought from Ford (F.N: Quote) in 2010. A sedan is also under development for the new brand.

Spokesmen for both Geely and Volvo declined to comment.

Launching a new car brand when China's economic growth is at its slowest in a quarter of a century may seem ambitious, but Geely, under chairman Li Shufu, beat the industry growth rate last year and has turned around Volvo's fortunes.

Geely sales rose 22 percent to around 510,000 cars last year, and Volvo earnings tripled, with the Swedish automaker predicting record sales for 2016.

Car sales in China, the world's biggest market, are forecast to grow by around 6 percent this year, according to the China Association of Automobile Manufacturers.

The aim is for L-brand cars to compete with Chinese-foreign venture brands, such as those produced jointly by General Motors (GM.N: Quote) and SAIC Motor Corp (600104.SS: Quote). That would leave Volvo to focus on the luxury market, and Geely to go up against domestic Chinese brands, two of the people said.

The new brand would launch into an already crowded Chinese market where at least a dozen foreign automakers and more than 20 local passenger car manufacturers, many with multiple brands of their own, compete.   Continued...

 
Staff members sit in front of a Geely signage at Auto China 2014 in Beijing in this April 20, 2014 file picture. REUTERS/Jason Lee/Files