Volvo should start producing its Chinese sister brand’s models at its factories as the auto industry grapples with overcapacity, according to its billionaire owner Li Shufu.
There’s potential for closer collaboration between the Swedish carmaker and its other brand, Geely, Li said Tuesday, as he underscored the challenges facing manufacturers.
“We can see that globally, the overcapacity problem is very serious,” the Volvo and Geely chairman told reporters in Gothenburg, Sweden, ahead of the company’s annual meeting.
“So now I think the solution for Geely and Volvo is that we should utilise our common capacity to develop.”
Carmakers globally are struggling with factories that aren’t running at full capacity.
In Europe, manufacturers are suffering from uneven demand for electric vehicles, US tariffs and weak consumer sentiment, while Chinese brands have been buffeted by a price war at home.
The conflict in the Middle East threatens to hit demand further.
Volvo already produces models at Geely’s plants in China, while Polestar also leverages its connections with two models made at the Swedish company’s plant in Charleston, South Carolina.
Volvo on Monday announced a deal to become the exclusive importer of cars made by Lynk & Co, another Geely brand, in Europe.
Volvo’s factories, including a site being built in Slovakia, could accommodate production of additional Geely brands, the Swedish company’s CEO, Hakan Samuelsson, said at the same event.
“We don’t believe the tariffs we have today will go away. We need to live with them and utilise common factories,” he said.
Li outlined a measured approach to expanding Geely’s presence in Europe.
“Geely is not a great fan of simply producing cars in China and just exporting to Europe — that’s not the way,” he said. “Rather, we believe in localisation in Europe.”
Geely acquired Volvo from Ford for $1.8 billion (around R30 billion) in 2010 — then the largest takeover of a foreign automaker by a Chinese company — before going on to build a sprawling auto empire that includes Polestar, Lotus and Zeekr.
But Volvo has endured a tough time since listing in Stockholm in 2021, with its shares down 60% in that time. The company has spent the last year cutting costs to become more efficient.
Li acknowledged the IPO had not gone to plan, citing a slower-than-expected shift to EVs and geopolitical tensions.
“Globalisation has come to an end, whilst we see the trend of economic regionalisation,” Li said.
Minority investors have raised concerns about Volvo’s performance, calling for clearer communication from its Chinese owner.
Those concerns intensified after the company’s fourth-quarter results missed expectations, prompting its biggest share-price fall on record.
The carmaker is also awaiting a ruling from US authorities on whether it can continue selling vehicles equipped with Chinese-developed software — a decision Samuelsson said is expected “before summer.”
The US accounts for about 17% of its global sales. “I’m not worried, so I don’t think you need to be,” he said.
The CEO has one year left on his contract. The search for a successor is underway, Li said.
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