Geely gets gov't support to complete Volvo purchase

Shanghai, March 29 (Gasgoo.com) China's largest private-run car maker Zhejiang Geely Holding Group signed a definite deal yesterday to buy Ford Motor's Volvo car unit for $1.8 billion, the country's biggest ever overseas auto brand purchase, media reported.

Unlike General Motors' failed deal to sell its gas-guzzling Hummer brand to Tengzhong, a little known Chinese machinery maker, Geely's Volvo purchase has been backed by the Chinese government, Reuters said.

Geely's chairman Li Shufu is already planning a factory in Beijing which will make 300,000 Volvo branded cars, or as many Volvos for China as are now made abroad for foreigners.

Made-in-China Volvo may get a boost from the central government's plan to support domestic brands and replace Volkswagen AG's Audi A6 as Chinese state officials' car of choice.

The carmaker has already announced an aggressive target of boosting its sales to 2 million vehicles by 2015 from last year's roughly 330,000 units -- about the same as Volvo's global output.

Geely said it had secured all the necessary financing to complete the deal, though it remained open to a possible loan from the European Investment Bank.