What's the news?

Amid ongoing speculation and whispers, Volvo's parent Geely has finally come clean about its intentions to build a sub-compact car. Using the Swedish company's knowledge and expertise in building some of the world's safest cars, Geely is maximising its control to plan a future assault on the European car market with a new Geely small car.

Firstly though, some perspective. Geely (Zhejiang Geely Holding Group Co. Ltd to give the organisation its full name) purchased Volvo for $1.8 billion from Ford in 2010. The plan back then was to increase Geely primary market share in China's fast-growing market. Simple enough, you would have thought. However, things turned sour for Volvo and global sales fell with growth plunging in China and Europe.

During that time Geely had a particularly bumpy ride. Its Geely CK 1 model earned a zero-star rating in the Latin NCAP for front occupant protection while another model only earned a four-star rating in the Euro NCAP. Geely has been pilloried too, for building cars that resemble blatant copies of models manufactured by Rolls-Royce and Citroen.

So, objectively the decision to use Sweden as a base for producing a Geely sub-compact car makes sense. By choosing Volvo as a collaborative partner, Geely will have prime access to markets in Europe and America, ensuring vehicle emissions and safety expertise will be developed by one of the most respected names in the business. And in turn, going a long way to restore the company's frangible reputation.

We understand that the car will be built at Geely's product development operation, which is located on Sweden's west coast and staffed by 200 engineers - many of them from China. "Geely's ambition is to raise its technological level, and you don't do that by taking ready-made products and putting them in your car," said Håkan Samuelsson, chief executive of Volvo Car.

Anything else?

There's no indication of when the car will be released. But Geely is desperate to overcome its safety and emissions problems on new vehicles and will doubtless leverage its ownership of Volvo to gain strong European and US market footholds. A serious desire that's not dissimilar to another emerging market player that drew its plans with great success - the Koreans. And look how far they've come in the past decade.