Geely planning China plant to produce Volvo cars

Now that Geely Automotive has won the bidding for Sweden's Volvo, China's No. 1 private auto maker is making plans to set up a domestic production base, according to sources familiar with the company.

Geely's first order of business is to work out where to produce its new vehicles. Sources familiar with Geely's future strategy for Volvo told Reuters that the company plans to cooperate with local city or provincial governments in China to build plants for Volvo cars tailored for Chinese consumers.

In China, Ford currently runs a car venture with Chongqing Changan Automobile Co, a domestic rival of Geely, to make Volvo S40 and S80 cars.

Geely is in talks with the Chongqing government to continue to make Volvo cars in the city, said the sources, who declined to be identified as they were not authorized to speak to the media.

The company's initial plan is to take over Changan's Volvo production lines and also partner with other Chinese enterprises, which would invest in a new Volvo plant in Chongqing jointly with Geely.

The Chongqing government is keen to keep the Volvo plant in the city, said the sources.

But no final deal has been reached yet.