Volvo-Owner Geely Expanding European Presence by Boosting London Cab JV

PARIS – Zhejiang Geely Holding Group, the Chinese owner of Volvo Cars Corp. and Geely Automobile Co. Ltd., quietly is expanding its presence in Europe with its two major holdings.

At a recent ceremony in China, the company announced the creation of a “Volvo-Geely Dialogue and Cooperation Committee” that will coordinate product and investment decisions between the two auto makers.

Geely Chairman Li Shufu will run the committee, and Geely and Volvo each will have four representatives.

The organization is similar to that of the Renault-Nissan Alliance, in which the two auto makers operate autonomously in many ways but are linked by a single top executive and oversight committee.

Volvo Cars of North America LLC President Doug Speck predicts business as usual as the Swedish auto maker transitions to ownership under Geely, although some analysts say changes are inevitable.

Speck, in a recent interview with Ward’s, says Li, referred to by some as “China’s Henry Ford,” believes Volvo should “remain true to its heritage and brand values.”

Volvo’s new CEO Stephen Jacoby, which Geely lured away from Volkswagen of America Inc. in August, told Ward’s at the Paris auto show he is exploring what the China-based auto maker might be able to contribute to the Swedish company. But he flatly rules out the notion the two might someday share a distribution network.

Geely U.K. JV builds TX4 London black cab.

Geely, however, does plan to produce Volvos in China. Just two models, the S40 and S80L, currently are being built there by a Ford Motor Co. joint venture in Chongqing.

Meanwhile, Geely also appears to be moving toward a deeper relationship with U.K. taxi maker Manganese Bronze Holdings plc, based in Coventry, in which the Chinese car company owns 20%.

The two also are partnered in a joint venture in China called Shanghai London Taxi International, which builds the TX4, known as the London “black cab.”

Manganese Bronze recently named two Geely executives to its own boards. Jie (George) Zhao now is deputy CEO and Wenming (Frank) Cao is a non-executive director.

A French distributor, Asie Auto, recently announced it would begin importing the TX4 from China.

The French black cabs will be left-hand-drive versions, powered by a 2.2-liter VM Motori diesel and 5-speed transmission, manual or automatic.

Since August, Manganese Bronze has been assembling cabs for U.K. customers in Coventry, with body panels and other parts shipped from China, which has reduced costs.

The engines are imported from Italy, which are expensive because of the strong euro and weak pound. The niche auto maker says it sold 466 units in the U.K. during the third quarter, up from 420 a year earlier.

International sales of the cabs built in Shanghai are lagging: Just 78 from 67 year-ago. In an October management report to shareholders, Magnanese Bronze says “adverse global economic conditions are still restricting the availability of finance to our potential customers.”

Geely reportedly produced only 208 TX4 cabs through the year’s first nine months, and sales in China through Geely’s Englon channel amounted to a mere 63 units.

But in November, the Chinese auto maker delivered 100 of the cabs to the city of Guangzhou in conjunction with the Asian Games, touting the cabs’ utility for handicapped travelers due to room inside for a wheelchair.

In France, the cabs will be sold through the former MG Rover dealer network, now known as Asie Auto. The network, under President Elisabeth Young, has tried to import Chinese cars bearing the Brillance and Landwind brands, but neither marque has been well-received here due to quality issues.

The black cabs have a far better chance in Western Europe, where they are considered iconic vehicles.

Young is quoted as saying taxi companies in the region have expressed an interest. Current taxi fleets in France are a mixture of fullsize cars, such as the Mercedes-Benz E-Class and Toyota Prius, as well as large minivans.

The TX4’s 2.5L 100-hp diesel engine is rated to meet current emissions standards. It emits 211 g/km of carbon dioxide, the equivalent of 29 mpg (8 L/100 km) with a manual transmission.

Young says the cab will start near €34,000 ($47,000). In China, the cars sell for $30,450-$33,400.