Volvo rolls out cars of future built on common Geely platform

By Helena Soderpalm

GOTHENBURG, Sweden (Reuters) - Volvo showed off its first two concept cars based on a new common platform with Chinese owner Geely on Wednesday, a small car and an SUV it hopes will help secure a firm premium market foothold.

The platform, dubbed Compact Modular Architecture (CMA), is part of Volvo's drive to grow sales and boost profit margins. While these have steadily improved over the past two years, they still lag those of premium carmakers such as Daimler .

Volvo's proposed new models, both painted white, are a modern take on the Swedish carmaker's distinctive look. It said the new small car range, based on the shared platform, would include a pure battery electric car, in line with a target to electrify all models.

"This (the premium segment) is a growing segment and with this platform we have a great potential to grow, with our ambition to be an 800,000 car-company", Volvo Cars CEO Hakan Samuelsson told Reuters at an event to launch the cars.

"It also plays an important role for our goal to reach one million electrified cars in 2025."

Volvo, which will start producing the new "40" series models in 2017, is a small player in a sector plagued by overcapacity.

Geely and Volvo each sold about half a million cars last year, while world leaders Toyota <7203.T>, Volkswagen and General Motors (NYSE: GM) sold some 10 million each.

After stagnating under Ford (NYSE: F), Volvo won a new lease of life after it was bought by Zhejiang Geely Holding Group [GEELY.UL]in 2010, with investment in new models and factories as the Chinese automaker leapfrogged a decade of research and development in its mission to push upmarket.

Geely's ambitions to break into European and U.S. markets is centred on the China Euro Vehicle Technology (CEVT) development hub it created in 2013 in Sweden to build the new platform, which it will use in Volvo and Geely's small cars.

Geely will also launch a new brand next year, codenamed "L", based on the platform, sources have told Reuters.

Volvo, one of Sweden's biggest companies by sales and staff numbers, swung to a profit in the first quarter as the XC90, its first model developed under Geely, lifted both sales and earnings, with a record 7.5 percent operating margin.

(Editing by Alexander Smith)

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