Geely tie-in won't hurt Volvo

VOLVO'S technology and platform sharing deal with its Chinese parent company Geely is a “great opportunity” and will not impact its product according to the Swedish brand's local chief.

Chinese automotive giant Zhejiang Geely Holding Group officially purchased Volvo from the Ford Motor Company in August 2010 for $US1.8 billion, with Geely's chairman Li Shufu named chairman of Volvo.

While the two companies have maintained a separate business for their vehicle development and manufacturing, it was announced early last year that the pair would collaborate on a new Compact Modular Platform (CMA) for future compact cars, to be developed at a new research and development centre in Gothenburg, Sweden.

At the time, Volvo said that 200 engineers from Sweden and China would work to develop new technology for both brands as well as the shared compact platform which could underpin the next-generation V40 hatch, not due until 2016-17 at the earliest, as well as Geely-branded models.

Speaking with local media last week, Volvo Car Australia managing director Matt Braid said that while the shared platform is “well into the future”, it is still an exciting development for both brands.

“I think it would be unfair to say its Geely componentary or Volvo componentary,” he said. “I think its going to be a platform development type exercise, in line with what every other brand is doing.

“Whether it be Audi, Volkswagen, Skoda, Seat, Mazda, Ford whatever. That’s how we are looking at it.”

Mr Braid said he does not think linking a premium brand such as Volvo to a Chinese car-maker will have a negative impact on brand perception or sales in Australia.

“At the end of the day, as with our current cars and others as well, it’s about the brand. As long as people are buying a Volvo that looks, feels, drives as a Volvo should, I don’t think the average person would really care about linkages, technically or otherwise, as has been proven with other brands.

“We are not concerned by that.”

Mr Braid reiterated Geely chairman Li Shufu's previous comments that the Chinese brand and Volvo “will be brothers, not father and son”, indicating that despite the shared platform and technology, the two companies would maintain their own distinct identities.

“It’s a great opportunity for the companies under the Geely banner because, obviously chairman Li Shufu has said he wants to see the company be two brother brands, he wants to see them distinctly separate.

“But having the ability to control platforms for various brands under one umbrella, that is a very good opportunity because if you look at sharing of technology under competitive brands, that’s a different kettle of fish as well.

Among the global car-makers that share platforms and technology, Mr Braid highlighted the Volkswagen Group as the best example of of a company that has successfully maintained individual brand identities while using shared underpinnings.

“I think Volkswagen are probably the best at it in that regard that they are developing their own platform amongst their own brands. They are not bringing stuff in.

“And we are very much a stand alone organisation, we have our own engines, we have our own platform technology. And obviously the announcement of the small platform co-development with Geely in Sweden will be another string to the bow of the company.”