Volvo to get 2010 sales boost from Geely tie-up

Volvo Cars Corp., one of Ford Motor Co.'s (F) premium brands, expects to get a sales boost in China over and above the impetus of that fast-growing market once it comes under the wing of Zhejiang Geely Holding Group Co., the Chinese company that is the preferred bidder to take over the Swedish car maker, Volvo's Chief Executive said Tuesday.

And that is good news for workers at Volvo's main Torslanda plant in Sweden that is working well below capacity.

"It will be hugely beneficial to have a Chinese partner or owner, as access to the Chinese market has got to be bigger than the 30,000 [vehicles] that we will sell there this year," Stephen Odell told Dow Jones Newswires in an interview at the Geneva Motor Show.

Odell noted that the Chinese market could reach 15 million units this year, a figure that he predicted could rise to 20 million in three to five years.

"It's an immediate bolt-on opportunity," he went on. "Unless you are connected in China it's very difficult to get business from the Chinese government and institutions. There could be over 80,000 units of opportunity just through that route," he commented.

Odell said negotiations are still on track for an agreement for Geely to purchase Volvo to be signed by the end of this month, with the sale closure coming in June.

Sales of Volvo's up-market cars rose 25% in the last quarter of 2009 amid generally more buoyant market conditions and the momentum has persisted through February, Odell said. "We're pretty confident we can build and sell up to 40,000 more cars this year than we did in 2009. We're not declaring victory; it's just that we're definitely on an upward trend," he said.

Volvo posted an operating loss of $32 million last year excluding exceptional items, and company officials say Volvo could return to profitability once its sales rise over the 400,000 mark.

In 2009, the company sold 334,808 vehicles. Volvo makes its cars at two assembly plants in Sweden and Belgium.