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SHANGHAI (Reuters) - Sweden's Volvo Cars will produce at its Belgian factory a small car based on a common platform and engine technology developed with Chinese parent Zhejiang Geely Holding Group [GEELY.UL], Volvo's chief said.
Volvo Cars President and Chief Executive Officer Hakan Samuelsson told Reuters in an interview at the Shanghai auto show this week that the small car would probably be produced in China as well, though the company had not decided where as yet.
Samuelsson said Volvo's sales of small cars had always been too small to be profitable and needed a partner who could share the costs of developing and manufacturing a competitive vehicle.
Chinese automaker Zhejiang Geely, which also owns black cab maker London Taxi Company, bought the struggling Swedish company from Ford Motor Co. (F.N) in 2010.
"We have decided we will be using Ghent for Europe," Samuelsson said, referring to Volvo's factory in Ghent, Belgium. "In China, we have to look into this, and we are not decided."
He said they had three options in China: two existing plants in the southwestern city of Chengdu and the northeast city of Daqing, or a new automobile assembly plant being built in Luqiao, a district of the eastern China city of Taizhou.
"Those are the factories we have in China, so it's a good guess that it will be one of them."
Two sources close to Geely said Volvo and its Chinese parent were likely to make cars based on a new platform called Compact Modular Architecture (CMA) together at the Taizhou plant.
Geely is expected to start producing a sport-utility vehicle based on CMA underpinnings at the new Luqiao plant towards the end of 2016, but it was not clear when Volvo would start producing its own CMA cars in China.
Samuelsson said it was a "good guess" that Volvo's first CMA-based car would be a fully-fledged redesign of the Volvo V40 hatchback, since it is the only small car Volvo markets around the world now.
He said, however, that Volvo was also interested in using common platform and powertrain technologies with Geely to come up with a small SUV.
"SUVs are growing in the world, so that is a good guess that something in that segment will be worth taking a look at," Samuelsson told Reuters.
Editing by David Clarke