Zhejiang Geely Holding Group Co Ltd, parent of Geely Automobile Holdings Ltd, hopes to receive government approval for its joint venture with Volvo Car in the first half of 2012 so production can start next year, Vice President Daniel Li said.
“We believe the joint venture will be approved,” Li told reporters on Thursday after Geely Automobile’s results briefing. Li, who is also a board member of Volvo Car, said he hoped sales of China-made Volvo cars could be launched in 2013.
Geely is required to set up a joint venture with Volvo, which is still regarded as a foreign brand by Beijing, before they can produce Volvo cars in China.
Volvo aims to more than quadruple its sales in China to 200,000 a year in 2015 and has hired New York Knicks basketball sensation Jeremy Lin to help sell its luxury cars in China and the United States, the world’s two biggest car markets.
Swedish premium brand Volvo, which was taken over by Zhejiang Geely from Ford Motor Co in 2010, sold 47,140 cars in China last year, up 54.4 percent.
Geely Automobile Chief Executive Gui Shengyue also said a recently signed technology transfer deal between Zhejiang Geely and Volvo would allow the listed Geely to make use of full access to Volvo’s technology and make the homegrown auto maker more competitive.
Zhejiang Geely will develop a new premium brand for the mass market in China using Volvo technologies but the new brand will later be put under Geely Automobile, Gui said.
“The relationships between Volvo and Geely Automobile are like brothers and they will not compete with each others as they target different markets,” he added.
Geely sells cars to mass consumers while Volvo taps the luxury market, he added.
Geely Automobile reported a better-than-expected 13 percent rise in 2011 net profit on Thursday, sending its shares up nearly 4 percent.
The stock has risen 76 percent this year after losing 50 percent in 2011 on hopes that the Chinese auto market will improve. It outperformed a 13 percent gain in the broader market in 2012.
Car sales in China only rose 5.2 percent last year after Beijing scrapped tax incentives for small cars, down sharply from a more than 30 percent growth in 2010.
Geely Automobile’s domestic volume sales fell 3 percent in 2011 but exports rose 93 percent last year to 39,600 cars, representing 9 percent of its total sales of 421,611 last year.
The company, which has been trying to move up the value chain, posted net profit of 1.54 billion yuan ($243.56 million) for 2011, up from 1.37 billion yuan a year ago. The net was higher than a consensus forecast of 1.49 billion yuan polled by Thomson Reuters I/B/E/S.