BEIJING -- China's Geely is building a new plant to produce a quarter of a million bigger-sized cars that it expects will power future growth and help meet its goal of selling more than 2 million vehicles by 2020, two people familiar with the matter said.
Zhejiang Geely Holding Group Co., one of China's five biggest automakers and the owner of Volvo, is building the facility in the eastern port city of Ningbo where it already operates an assembly plant, as per the sources and information on a Geely-owned construction bidding procurement website.
Once known for its cheaper, copycat designs and shoddy quality, Geely has assumed upmarket aspirations after the Volvo deal and has expanded sales significantly since 2016 by banking on smaller compact cars.
The planned capacity increase underscores its ambitions as well as the shift in customer preferences toward bigger vehicles such as utilities and minivans in China, the world's biggest auto market.
The new capacity will enable Geely to produce roughly 250,000 more cars a year in Ningbo and add larger cars to its lineup, as well as ramp up launches at its new brand Lynk & CO, which Geely came up jointly with Volvo.
The plant will have two assembly lines. According to information on the Geely-owned website, the automaker plans to spend 3.4 billion yuan ($498.3 million) for one of them. The overall investment planned for the plant was not immediately known.
Geely unveiled two years ago its goal to produce and sell 2 million vehicles and become a major global automaker by 2020. It has made steady progress towards that, with sales of Geely branded vehicles forecast to reach 1.58 million vehicles this year.
LMC Automotive's senior market analyst, Alan Kang, says global automakers such as Ford Motor Co. and Hyundai Motor Co. are now losing market share to Geely in China with customers flocking to an array of compact cars Geely has developed by benchmarking Volvo technology and expertise.
Those Geely vehicles, such as the Boyue utility and Borui sedan, are priced at 100,000-160,000 yuan ($14,600-$23,400) and 120,000-180,000 yuan ($17,600-$26,300), respectively.
"But they need bigger, fancier cars to keep growing," LMC's Kang said. "Geely needs to do that to better compete with global brands." Geely also needs bigger cars to raise transaction prices to grow revenue.