The Chinese automaker and its subsidiary began R&D at a Swedish facility last year.
Volvo Geely Logos Image: Volvo Geely |
The subcompact car will be the second project undertaken by the Zhejiang Geely Automobile Holding Group Co and its subsidiary, Volvo Car Corp.
Having apparently patched-up their differences over brand direction reported last year, the two companies have agreed the new model would be used exclusively under the Geely brand, allowing it to compete against international rivals such as the Ford Fiesta, VW Polo, Honda Fit and the Toyota Yaris.
In an interview with The Wall Street Journal, Volvo CEO Hakan Samuelsson claimed the new model is likely to launch within the next few years, although remained unspecific about the exact details of the project.
German supplier Brose Group also confirmed the project was underway, releasing a statement claiming it would supply the components for the new Volvo-Geely subcompact car.
Volvo already unveiled an ambitious plan earlier on this year to use just one platform for all of its new models. The single chassis architecture has one basic engine and transmission, but will be built around "Scalable Product Architecture" that will give it a range of different size options depending on end-user requirements.
Affordable and economical, subcompacts are an increasingly important segment in China's auto market.