Zhejiang court hears Volvo case of contract breach

A local court in Jinhua, Zhejiang province began to hear a lawsuit between Volvo Auto Sales (Shanghai) Co Ltd and a Zhejiang auto service company Thursday, the Oriental Morning Post reported Friday.

The Zhejiang Dingxin Auto Service Co Ltd filed suit in Jinhua Intermediate People's Court in June 2009, accusing Volvo of breaching a contract. Dingxin demanded termination of the contract, and 13 million yuan in damages.

Volvo (Shanghai) shut down Dingxin's dealer management system, and crossed it off from the list of Volvo's vehicle examination system without advance notice, according to the auto services provider.

These moves paralyzed Dingxin's normal operations, and it lost all the data saved in the dealer management system.

Volvo owners in Jinhua have nowhere to go for vehicle maintenance as a result, the paper said. Similar situations emerged in Wuxi, Jiangsu province and Zhengzhou, Henan province, the paper reported.

Zhejiang Geely Holding Group is set to sign a purchase deal with the Swedish automaker on March 28.

"Judging from the case, there are potential risks in Volvo's after-sales service system in China, which may be easily ignored in an acquisition process," said Lang Lixin, lawyer with Zhejiang L&H Law Firm.

"Contigent liablities are possible in the deal," he said.