The sport-utility vehicle, codenamed “L”, will be the first model based on the Compact Modular Architecture (CMA) platform developed by Zhejiang Geely Holding Group and Volvo. A sedan is also said to be under development for the new brand, and new factories are expected to be set up.

Given the economic slowdown in China, the launch of a new car brand seems ambitious but some analysts believe that Geely, owner of Volvo since 2010, has nevertheless succeeded in beating the industry growth rate in 2015.

Geely’s sales increased 22% to around 510,000 cars in 2015, and Volvo earnings increased tripled, with the Swedish automaker predicting record sales for 2016. Read more on Volvo’s results here.

According to industry insiders, the L-brand cars are to compete with Chinese-foreign venture brands, such as those produced jointly by General Motors and SAIC Motor Corp. Volvo will continue to focus on the luxury market, while Geely is to tackle domestic Chinese brands.

However, some market experts remain cautious and say the new brand will come into an already crowded Chinese market, where at least a dozen foreign automakers and over 20 local passenger car manufacturers, many with multiple brands of their own, compete.

The CMA platform is said to be part of Geely’s preparations for a push into European and U.S. markets, and is to allow all three brands, Volvo, Geely and L-brand, to design new models from a common base

No official statement has been provided by either automotive manufacturer.

Source: Reuters