Volvo said that the centre will ‘develop a new modular architecture and set of components for future C-segment cars, addressing the needs of both Volvo Cars and Geely’.

The modular architecture will allow for several different vehicle platforms to be developed, enabling Volvo to develop solutions for the global premium segment, while Geely will continue to focus on the high volume segment in China and selected international markets.

‘Our group has ambitious goals to increase the competitiveness of our brands,’ said Geely chairman Li Shufu. ‘Geely will continue to improve its product quality in the years to come and can learn from Volvo Cars. However, the sharing of knowledge and technology has to be done without jeopardising brand integrity and individual product development. We believe a stand-alone, yet joint R&D Centre with a focused approach is the best way to achieve this.’

Volvo added that the development of its architecture for larger segments (SPA) continues within its own R&D organisation and will lead to the launch of the first SPA vehicle in 2014.

The project will also realise considerable cost savings in terms of development, testing and sourcing.

The centre will be run by Mats Fägerhag, currently vice president at Product Strategy within Volvo Cars, and will employ approximately 200 full-time employees.

It will be fully operational towards the end of 2013.