A Chinese car built in Western Europe? Geely could be the first

Li Shufu's (centre) Zhejiang Geely Holding Group started selling its upmarket compact SUV in China about two months ago under the Lynk & Co brand for a base price of 158,800 yuan (S$32,759). PHOTO: REUTERS

HONG KONG (BLOOMBERG) - China may be poised to build its first car in Western Europe, with the help of Sweden's Volvo Car Group.

The iconic brand that was taken over by Chinese billionaire Li Shufu would offer its factory in Gent, Belgium, to build an upscale brand for the tycoon, the Swedish company's chief executive officer Hakan Samuelsson said.

The Swedish carmaker may also extend its Europe infrastructure - service and other logistics - to the brand.

Mr Li's Zhejiang Geely Holding Group started selling its upmarket compact SUV in China about two months ago under the Lynk & Co brand for a base price of 158,800 yuan (S$32,759).

Volvo Cars could consider offering the factory to build the model if and when the Chinese company wants to expand to Europe, Mr Samuelsson said in an interview in Hong Kong on Wednesday (Jan 24).

A "Made in Europe" stamp will augur well for the ambitions of a Chinese brand as it takes on global car majors such as Volkswagen, which has dominated the China car market for a decade.

After years of selling lower-priced models at home, Chinese carmakers such as Geely and BYD - which signed Hollywood star Leonardo DiCaprio as a brand ambassador - are increasingly turning their attention to the international market.

"If and when they decide to go global, to Europe, possibly the US, we can of course make that entry more credible," Mr Samuelsson said.

Mr Li bought Volvo Cars from Ford Motor in 2010 and spent more than US$11 billion to modernise its production facilities.

Last year (2017), Geely bought almost 50 per cent of Malaysia's Proton Holdings and 51 per cent of British sports-car maker Lotus Cars.

Mr Li has ambitions of making Geely into a global major and as part of that plan, he unveiled the Lynk & Co in 2016, a brand that targets young customers. The US$25,000 (S$32,641) Lynk & Co brand compares with the more popular US$14,000 Haval H6 from Great Wall Motor.

Volvo Cars owns 30 per cent of Lynk & Co, while Geely Automobile Holdings holds 50 per cent. The rest is with Zhejiang Haoqing Automobile Manufacturing, a company controlled by Zhejiang Geely.

Lynk & Co shares the production line with the Volvo XC40 in a factory in China's Luqiao, 350km south of Shanghai.

"We would of course have interest doing that," Mr Samuelsson said, referring to the support Volvo Cars is offering Geely. The Chinese carmaker is studying the feasibility of making the cars in Europe, a Geely spokesman said.

Lynk & Co's first model, the 01 - a compact five-seat SUV - features in-car Internet connections that allow users to open the car without a physical key and share the vehicle with a phone button.

The brand has sold more than 6,000 units since it hit the market last November in China. Geely plans to start selling the model outside China from mid-2019, beginning in Europe.

Volvo Cars' volume sales in China last year rose about 25 per cent to 114,410 units, and the carmaker's biggest market will "continue to grow fast" in 2018, Mr Samuelsson said, without elaborating.

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