Looking to expand in the world’s largest auto market, Volvo will ink a joint venture deal with Geely to build a new production plant in China. Although Geely owns a 51 percent stake in Volvo, a joint venture is needed to produce vehicles in China as the country considers Volvo a foreign automaker.
Volvo told Bloomberg it will announce “concrete details” about the plan in about two month, but it’s expected that the Swedish automaker will setup shop in the southwestern city of Chengdu. Volvo is also considering two additional plants for vehicle and engine production.
Volvo has yet to announce which models it will produce in China.
Volvo is targeting 800,000 annual sales by 2020, with China likely to play a major role in that goal. The announcement of the joint venture is hardly a shock as it has been widely speculated since Geely’s 2010 purchase of Volvo that the luxury automaker would eventually produce cars in its new “home” country.
The joint venture will also require Volvo to establish a new China-only car brand.
