Chinese Car Maker Geely Partners With Volvo For A New Brand Codenamed 'L' In 2017

Apr 18, 2016 08:08 AM EDT | Vanessa Doctor

Chinese automaker Geely recently entered a joint partnership with Volvo to feature a new brand in 2017. The brand currently exists under the codename “L,” based on the marque’s first initial.

Geely and Volvo will showcase a new sport-utility vehicle, which will be the first model inspired by the Compact Modular Architecture (CMA) platform that Zhejiang Geely Holding Group and Volvo developed previously, writes PaulTan.org. Geely purchased the Swedish automaker from Ford in 2010. The Chinese company, headed by chairman Li Shufu, was able to boost Volvo’s economic performance in 2015, despite the country’s dwindling economic position. Aside from the upcoming SUV, there will also be a new sedan being developed by the new brand.

L-brand vehicles are planning to compete with Chinese-foreign venture brands. Geely will be prepared to battle domestic Chinese cars, while Volvo will be assigned to compete with luxury brands. Currently, the Chinese market has a minimum of 12 foreign automakers and over 20 local passenger carmakers. Many of these companies feature several brands and are competing in the already saturated industry.

Reuters also notes that in 2015, Geely was able to improve its sales by 22 percent or to about 510,000 cars. Volvo also tripled its earnings and is set to reach record sales in 2016. China is the biggest market in the world, and car sales in the country are expected to increase by about six percent in 2016, based on the China Association of Automobile Manufacturers.

Some experts are skeptical about Geely’s bold move of introducing a new car brand. Others hope that Geely will be successful, which will show that there is still room in the existing auto market. Geely is required to shell out hundreds of millions and wait years but can enjoy substantial rewards if they realize their vision. New factories will be built for L-brand. Operations, research and development will occur both in China and Sweden, while export efforts are also being planned to the United States and Europe.

In 2014, Geely actually mentioned its plans to remove three sub-brands and only offer vehicles under the Geely brand. They also initially intended to consolidate their sales network. The introduction of the L-brand will mean that Geely has at least changed its old plans.

“The last thing the Chinese automotive world needs is another brand. The elimination of more brands in China should be the route,” said James Chao, Asia-Pacific chief of consultancy IHS Automotive.

More updates and details on Geely, Volvo and L-Brand are expected soon.

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