Volvo has ‘special relationship’ with Chinese government, says CEO

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Volvo enjoys a commercial advantage in China over other Western car firms because of the Swedish company’s ultimate Chinese ownership, its chief executive has claimed.

Volvo was acquired from Ford by Li Shufu’s Zhejiang Geely group for $1.5bn ($1.13bn) in 2011 in one of the most high-profile purchases of a well-known Western brand by a Chinese firm to date.

It is building a new factory in Chengdu to manufacture its new Polestar electric-hybrid sports car and says it is involved in a “constructive dialogue” with the Beijing authorities in the roll-out of vehicle charging infrastructure.

“This is our second home market [so] of course we have a special relationship to this market, being Chinese owned,” said Hakan Samuelsson, speaking in Shanghai, at the Polestar’s unveiling.

“We are the only [Western] company that really has control of our China business. We don’t need to negotiate and discuss in some joint venture. That makes it easier for us to move faster in China.”

China is the world’s largest car market, with around 28 million units sold in 2016, and Western and Japanese car firms are competing vigorously for their slice of the action.

Around 20 per cent of Volvo’s sales are in the country.

Several Western car companies, including Volkswagen, BMW, Ford and Peugeot have joint manufacturing ventures in China with local car firms,

Under Chinese law, foreign car firms have to partner with a local firm to operate. But Volvo’s joint venture in China is with the group’s ultimate owner Geely.

Mr Samulesson, a former CEO of the Germany truck maker MAN, joined Volvo as CEO in 2012.

Geely also owns the London Taxi Company, which manufactures black cabs, and a 51 per cent stake in Lotus Cars.

It is the second largest non-state owned car maker in China.

Mr Li founded the Geely group in 1986 in Hangzhou, when it manufactured fridge components, before diversifying into motorbikes and finally cars in 1997.

"I think they're very proud of Volvo. Volvo is bringing a brand image and technology to the Geely group" said Mr Samuelsson.

"That is a fair exchange for us because we're getting lower cost and higher volumes."

Sources close to Volvo maintain that the Gothenburg-headquartered company has retained a high level of autonomy within the Geely group since the acquisition.

China is setting quotas for electric and hybrid vehicle production for all its domestic carmakers and is planning an eventual ban on the production of cars powered by carbon-emitting combustion engines.