Sweden-based Volvo Car Group on Thursday signed a memorandum of understanding (MOU) with its Chinese parent Zhejiang Geely Holding Group to set up a 50-50 joint venture (JV) in China, under which they will share cutting-edge technologies and jointly purchase components, domestic news portal sohu.com reported on Thursday.
The sharing of technologies and purchases will be realized by cross-licensing, which will have the effect of taking the development of the Chinese auto group's brands - Volvo, Geely Auto and LYNK & CO - to the next level, the report said.
LYNK & CO, a premium brand mainly based on Volvo's vehicle technology, manufactured and sold globally, has attracted much attention among consumers since its debut in Berlin, Germany in October last year, said the report. It is priced between Volvo and Geely.
The companies will also jointly develop next-generation technology for battery-powered electric vehicles, and the fruits of their collaboration will be managed by the new JV, it said.
Separately, another MOU was signed among Hong Kong-listed Geely Automobile Holdings, Zhejiang Geely Holding Group and Volvo Car Group, the report said. Under this MOU, Volvo will take a minority shareholding in LYNK & CO.
The final agreements on the new JV and Volvo's holding in LYNK & CO will be signed in the near future, according to the report.
"We will unlock significant benefits across our portfolio by sharing both technologies and next-generation vehicle architectures," Li Shufu, chairman of Zhejiang Geely Holding Group, said in statement, according to a Reuters report on Thursday.
"I am confident these synergies can be achieved while preserving the separate identities and strategic autonomy of our different automotive brands," Li said.
Zhejiang Geely Holding sold 530,627 vehicles in the first half of 2017, up 89 percent year-on-year, according to the report.