May 17, 2016 / 12:07 PM / 2 years ago

China's Geely cars think big with Volvo makeover

GOTHENBURG, Sweden (Reuters) - The Briton who smoothed out Volvo’s boxy lines and put signature radiator grilles on Lincolns for Ford is aiming to give China’s Geely range global appeal by ditching its utilitarian image.

Geely car’s chief designer Peter Horbury pose for a photo in Stockholm, Sweden April 29, 2016. REUTERS/Mia Shanley

Peter Horbury is central to efforts by Geely - long seen as a cheap, no-frills brand in China and unknown in the western world - to push upmarket and go international by tapping European design and technology.

Zhejiang Geely Holding Group 0175.HK’s purchase of struggling Swedish carmaker Volvo from Ford F.N in 2010 has helped it leapfrog a decade of research and development.

The tie-up has enabled Volvo to sell more vehicles in China than anywhere else and produced a common platform for Geely to widen its range. But at seventh place in China’s light vehicle brands, it has a long way to go in a sector suffering from overcapacity and stiff competition.

Horbury, who headed up design at Volvo in the 1990s and oversaw it for Volvo, Jaguar, Aston Martin and Ford’s other brands from 2002, says carmakers should play up their roots, citing what he called the “Hi, I‘m Dave” all-American appeal of his Lincoln grille.

“I‘m not suggesting we’ll do cars with pagoda roofs, but all new cars have a little signature somewhere that’s Chinese,” Horbury, Geely’s chief designer since 2011, told Reuters at the Swedish design studio where he spends three weeks a month.

That means dashboard curves which he compares to a famous Chinese bridge in Hangzhou where Geely has its headquarters.

“Here at a Chinese company, I think there is something special to sell, and if you just become anonymous, that’s what you remain,” said Horbury, 66, who spends a week each month in Shanghai.

Geely cars range from 38,900 Chinese yuan ($6,000) to 249,800 for an electric vehicle. Its new flagship GC9 sedan, which Horbury worked on, starts at around 120,000 yuan.

“The product seems pretty good, styling wise, and they have got to get the core sedan product right which it appears that they have (with the GC9),” said James Chao, Asia-Pacific chief of IHS Automotive.

“But that’s just the start of the brand building exercise. It will take years for them to build this brand, whether it’s this brand or another brand, to upgrade to the Volkswagen level,” he said. “In the meantime, they’ll have to price a bit more aggressively.”

Volvo and Geely each sold about half a million cars last year while world leaders Toyota, Volkswagen and General Motors (GM) sold around 10 million each.

In China, Volkswagen VOWG_p.DE tops sales charts for all vehicles compiled by LMC Automotive, with the biggest homegrown manufacturer Changang in fifth place and Geely in 14th.

COMPETITIVE NEIGHBORS

Unlike neighbors Japan and South Korea, which are among the five top car exporting countries in the world, China is not even in the top 20, the World’s Top Exports website shows. It exported fewer than half a million passenger vehicles in 2015, according to data from the China Association of Automobile Manufacturers.

At the heart of Geely’s ambition to break into European and U.S. markets is the China Euro Vehicle Technology (CEVT) development hub, created by Geely in 2013 in Sweden to build the platform which will be used in new Volvo and Geely small car models.

On Wednesday, Volvo is set to unveil two new concept cars - the first to use the common platform. Sources have told Reuters Geely will launch a new brand next year, codenamed “L”, with cars based on the platform.

“Not even during my time at GM did I experience a more aggressive growth plan,” said auto industry veteran Mats Fagerhag, who heads CEVT, a tech center in Gothenburg with a staff of 1,700 in which Geely is investing several hundred million dollars a year.

Fagerhag said local production in Europe could be a future step, to enable Geely, which also owns the company that makes London’s trademark black cabs, to get a complete range of brands the same way Volkswagen VOWG_p.DE has. Horbury declined to comment on brands.

NUMBERS

After initial scepticism over whether Geely could make the most of European technology, it has proven to be a keen investor and collaborator. The joint development between the Swedes and Chinese appears to be paying off when looking at the numbers.

Volvo, whose ads play up its Swedish heritage, featuring football player Zlatan and musicians Swedish House Mafia, saw earnings triple last year thanks in large part to demand in China, now its largest market.

“We went from zero to three factories, to 5,000 people, 200 dealers,” Volvo CEO Hakan Samuelsson told Reuters.

Record sales are predicted this year as Volvo pushes into a premium sector dominated by German heavyweights such as Daimler DAIGn.DE Mercedes-Benz and BMW BMWG.DE.

Geely, which means auspicious in Mandarin, came through China’s auto market slowdown with sales up 22 percent last year compared to 4.7 percent for the market overall.

“Both can learn from each other - the knowledge that we have that is in the bricks here of how to engineer a car the way Volvo has ... the way we approach design from a more human point of view perhaps, and the fact that the Chinese come with a spirit of ‘Let’s get it done,'” Horbury said.

The designer, who started with a staff of six in a “borrowed room” at Geely, now leads 350 designers in Gothenburg, Shanghai, Barcelona and California.

Geely Chairman Li Shifu, who founded the group in 1986 as a refrigerator parts-maker with a loan from his father, sometimes visits the Swedish studio - an old shipbuilding warehouse.

Horbury said Li’s approach was very different from that of his American or European bosses, combining entrepreneurship with art and poetry. One time, Li brought a stack of books to the studio littered with post-it notes.

“One was on geology - rock formations - one was on Chinese landscape, one was on Chinese architecture, and fashion,” Horbury said. “Just examples that he felt would inspire the designers for the next Geely.”

(This story corrects paragraph 15 to make clear new platform not for all car models)

Additional reporting by Edward Taylor in Frankfurt and Jake Spring in Shanghai; editing by Alistair Scrutton and Philippa Fletcher

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