Volvo agrees to technology transfer to Chinese parent Geely

BEIJING (Reuters) -- Zhejiang Geely Holding Group has signed a deal with Volvo Cars, which Geely acquired in 2010, allowing the Chinese automaker to tap some technologies Volvo plans to phase out over the next couple of years.

Geely said it had signed three "technological cooperation agreements" with Volvo, giving it access to safety and comfort technology as well as a mid-sized vehicle platform. It did not elaborate. The deals follow an agreement announced in March that the two firms would look for ways to provide Geely technology that Volvo plans to stop using.

Zhejiang Geely Holding Group also is parent of Hong Kong-listed Geely Automobile Holdings.

The agreements could provide a lift to Geely's vehicle engineering abilities and help the two companies cut costs, but it also creates delicate questions about the possible dilution of Volvo's brand.

In a press release on Monday, Geely pointed to "synergies" in the technology sharing.

"Volvo enjoys a leading advantage in a number of technologies ... These technologies and experiences are valuable to Zhejiang Geely Holding Group's exploration into overseas market and its product quality improvement," the company said.

In return, "Zhejiang Geely Holding Group's local market exploration experience and cost control experience can also be beneficial to Volvo Car's exploration in the Chinese market and increase in competitiveness," Geely added.

Geely did not mention specific ways it plans to use the technology from Volvo. However, Geely's founder and chairman, who is now also chairman of Volvo, has said previously Geely planned to develop a "premium" Geely brand of car using in part technology from its Volvo unit.

In an interview in April, Li said one area of collaboration might be to use Volvo's in-car air filtering and control technology.

"Air pollution in China is quite severe," he said, "so we want to have that technology transferred to Geely to improve the in-car air quality of Geely cars to make it more like air you breathe in the forest."