Volvo shares engine technology with its Chinese parent

With this development, the Volvo brand will get diluted even further.

As per sources familiar with the matter at hand, Sweden’s Volvo Cars, which incidentally is a unit of Zhejiang Geely Holding Group, has agreed to provide its engines for Geely-branded vehicles; the development deepens the ties between both carmakers who share technology through a common third brand – Lynk & Co.

The first Volvo powered Geely model is expected to hit the market sometime in 2019, as per three sources close to both companies. They went on to add, that the car will feature a new 1.5-liter turbo charged gasoline engine which Volvo has been developing for smaller cars.

Cars featuring Volvo’s 2.0-liter turbo-charged engine technology will come out a later date.

“The terms of the recently announced joint venture between Volvo Cars and Geely Group mean that existing and future technologies can be shared by Volvo, Geely Auto and Lynk & Co, under license agreements,” said Volvo’s spokesman.

At the time of Volvo’s acquisition, analysts had questioned Geely’s ability to absorb the best of Volvo’s technology. With carmakers increasingly moving on to electric vehicles, fossil fuel powered engines is likely to be outdated in the near future.

The Chinese company now aspires to sells its wares outside China.

According to analysts, one huge risk for the Volvo brand is that, as it continues to merge with its Chinese parent, its brand image is getting diluted. Further by sharing its tech knowhow with a Chinese auto startup, the dilution becomes more meaningful.

As per Hakan Samuelsson, Volvo’s Chief Executive, the key is to differentiate the brand despite the company sharing its technology with the Chinese startup.

“The progress Geely has been able to make in improving products and brand image over the past several years makes me feel more confident they can execute this process successfully,” said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight.

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