Geely, propelled by Volvo, seeks launchpad to join auto-giant orbit

SHANGHAI -- Zhejiang Geely Holding plans to use a platform developed with Volvo to build new models in Malaysia for its partly owned Proton brand, a strategy that shows how it aims to accelerate a push to become China's first global auto giant.

The yet-to-be-finalized plans for Proton are just one strand of a Geely project to revamp factories at home and abroad using platforms it has been perfecting with Volvo since 2013. Geely bought the Swedish brand 10 years ago for $1.8 billion -- a deal that raised its international profile and sent shock waves through the global auto industry.

Volvo and Geely's Compact Modular Architecture (CMA) allows engineers to develop, design and build different types of compact cars with similar mechanical layout faster than before -- and at lower cost.

Models currently underpinned by CMA include the Volvo's XC40 compact SUV and the Polestar 2 full-electric sedan. Since 2017, more than 600,000 CMA-based vehicles have been sold globally, Volvo said last week.

Geely engineers told Reuters that CMA, along with a platform for smaller cars known as the B-segment Modular Architecture that Geely plans to roll out for Proton, allow them to harness the Swedish automaker's technologies and Geely's capabilities in cost control, supply chain management and local production.

"CMA will be the core of Geely's future architecture design. We learn technologies and build up talents through developing it," said Li Li, vice president at the Geely Automobile Research Institute, confirming the Proton plan during an interview in Ningbo, south of Shanghai. Li declined to disclose details of general investment, financial targets or a timetable for expansion plans.

From its lowly foundation in 1986 in Taizhou on the east coast as a maker of refrigerator parts, Geely has grown into one of the biggest automakers in China, the world's largest auto market accounting for nearly one in every three passenger cars sold around the planet. Geely now sells more than 2 million cars a year across all brands, ranking it not far from the world's top 10 automakers by unit sales.

The CMA platform in particular allows Geely and Volvo to design vehicles more quickly and cost-effectively, Li said, providing a technological springboard to gain scale and market share at a time when the auto industry must embrace a future featuring electric and autonomously driven transport.

Like Geely -- an anglicization of the Chinese word for lucky -- domestic peers Great Wall Motor and GAC have branched out with their own versions of vehicle platforms, harboring greater ambitions for selling cars in major Western markets.

But grand plans have previously been delayed, or simply canceled, amid a lack of practical preparedness, analysts have said, against a backdrop of years of trade tensions between China and the United States that have roiled the global economy. At the same time, attention has been diverted to deal with stalling sales at home as the pace of China's growth has slowed.

In its pursuit of global automaker status, Hangzhou-based Geely is now holding talks to merge the Volvo Cars business with its Hong Kong-listed Geely Automobile -- worth about $22 billion by market value, bigger then famed industry names such as Fiat Chrysler Automobile and Nissan.

As well as the 49.9 percent stake it took in Proton three years ago, the broader Zhejiang Geely Holding Group, led by Taizhou-born billionaire Li Shufu, now holds a 9.7 percent stake in Germany's Daimler and a majority stake in British sport car brand Lotus.

And while giants from Toyota to Volkswagen Group and General Motors have followed a similar shared-platform approach for their respective brands, Geely's strategy is a first for a Chinese company.

The automaker plans to develop all future models for the Geely and Lynk & CO brands on CMA or other related product platforms, such as BMA. It is also developing a new architecture to accelerate the launch of battery-electric vehicles with intelligent connectivity functions, said Li, a former Ford engineer.

In addition, Geely wants to shift development of the next generations of some popular existing models, such as the Borui and Emgrand sedans, to those architectures, he said. It takes about 18 months for Geely to significantly change a CMA-based car, versus 24 to 30 months to do so on a non-CMA-based model.

Using CMA, plant managers can switch production of different models to maintain smooth overall capacity utilization rates on production lines, said Oskar Falk, the Volvo-trained head at Geely and Volvo's first joint plant in Luqiao.

The factory already exports Polestar 2 electric sedans to the United States and Europe, and is preparing to make Volvo's first battery-powered electric vehicle, Falk said.

Geely also plans to start exporting China-made Lynk & CO 01 SUVs to Europe this year.

Automotive News Europe contributed to this report