According to a report by Automotive News, Geely, the new Chinese owner of Volvo Cars, wants the Swedish car maker, best known for its safety, to build cars that will compete head-to-head with premium automakers like BMW and Mercedes.
Geely purchased the Volvo brand from Ford for $1.5 billion which represents China’s biggest acquisition of a foreign automaker.
Sources close to the Chinese company state that the the research and development department of the Volvo brand will be the main priority, while a modest sale increase would be enough to keep the company on the profitability course.
“We want to make more high-level cars that compete with the S class of Mercedes Benz and the 7 series of BMW. We need products to compete in that segment,” said Shufu Li, CEO Geely.
“If Volvo can sell 380,000 units every year, the business will be profitable, but in order to get an upper hand in the competition we need a dramatic increase in volume (above that),” he said. Volvo sold nearly 335,000 cars last year, and lost $653 million.
Volvo’s high-end sedan, S80 sells for $39,200, a far lower MSRP than BMW’s entry level 7 Series in the US, 740i, which starts at $70,150. The other German competitor, Mercedes-Benz, has the S400 hybrid starting at $87,950.
Although Geely is one of the fastest growing automotive companies, their revenue and profits are considerably smaller when compared to the German mammoths like BMW, Mercedes and Porsche.[Source: Automotive News ]