The Hangzhou-based Geely is expected to pay between $1.7 billion to $2.2 billion for the embattled Swedish manufacturer, more than $5 billion less than Ford bought it for in 1999.
Reports suggest Geely will sign a definitive stock purchase no later than the Chinese New Year (February 14) which could lead to the deal being finalised in the second quarter of 2010, given the approval of the Chinese Government.
The finer details, such as how long Ford will supply engines and other components to Volvo, apparently remain under negotiation.
Another source from within China says Geely plans to almost double Volvo’s production with the construction of a new plant in Beijing capable of making 300,000 vehicles a year, helping Volvo return to profitability as early as 2011.
It is believed that Geely is keen to add up to three larger, more luxurious models to the Volvo range by 2014 in its attempt to sell one million Volvos by 2015.
The Volvo S40 and S80 sedans are already manufactured in Chongqing as a part of the joint venture between Chang’an, Ford and Mazda.