Volvo agrees technology transfer to Chinese parent Geely

BEIJING Mon Dec 10, 2012 9:05pm IST

The Volvo logo is seen on a new XC60 model in a showroom near the Volvo Car Corporation Headquarters in Gothenburg May 20, 2010. REUTERS/Bob Strong/Files

The Volvo logo is seen on a new XC60 model in a showroom near the Volvo Car Corporation Headquarters in Gothenburg May 20, 2010.

Credit: Reuters/Bob Strong/Files

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

Geely said on Monday it had signed three "technological cooperation agreements" with Volvo, giving it access to mid-size vehicle platform or underpinning technology, interior air quality, and safety technology. It did not elaborate.

The deals follow an announcement in March by the two firms agreeing to discuss specific ways Geely could tap technology the Swedish arm plans to phase out over the next few years.

Zhejiang Geely Holding Group is parent of Hong Kong-listed Geely Automobile Holdings Ltd. (0175.HK)

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, Geely pointed to "synergies" in the technology sharing.

"Volvo Car 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," it 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," it said.

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 with Reuters 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." (Reporting by Norihiko Shirouzu; Editing by Mark Potter)

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