Volvo Cars China has been fully "Geely-integrated", with its first ultra-luxury sedan benchmarking against the Zhunjie S800 | 36Kr Exclusive

Duan Jianjun, who moved from Beijing Mercedes-Benz to Volvo, has taken the position of President and CEO of Volvo China for less than 100 days, and has already taken charge of promoting the brand's first D-segment sedan project.

36Kr has learned from multiple industry insiders that Volvo is preparing to launch a brand-new ultra-luxury flagship D-segment sedan, codenamed "561" internally. Sources familiar with the matter stated that the new car is positioned to compete directly with the Zunjie S800, surpassing the current S90 to become the highest-spec sedan in Volvo's product lineup.

In May this year, Duan Jianjun joined Volvo from Beijing Mercedes-Benz, taking full control of the production, R&D, supply chain, and sales systems. Over the past 13 years, he helped Mercedes-Benz S-Class and Maybach establish an almost dominant position in China's D-segment sedan market.

The D-segment sedan project codenamed "561" at Volvo is the first major challenge for this "luxury car veteran" after taking office. The success or failure of this vehicle will determine the quality of his first report card to Volvo.

36Kr understands that this new car is planned as a China-exclusive model, adopting the same co-development model as vehicles such as the XC70. Specifically, Volvo China is responsible for product definition, safety standard control, and whole-vehicle certification, while Geely's China R&D team takes charge of three-electric system development, vehicle engineering, and supply chain management.

On July 17, Volvo's global CEO revealed during the Q2 earnings call that two new electrified vehicles will be unveiled in early autumn this year. It remains unclear whether the "561" project is among them.

The new car codenamed "561" will be the first D-segment executive sedan in Volvo's 100-year history, and also Geely Group's first foray into this market segment in its 40-year history.

This vehicle is of extraordinary significance to Geely Group. Sources revealed that Geely's core management has requested to mobilize resources across the entire group to support the project. "The company has suspended or delayed similar projects under Geely Galaxy, Lynk & Co, and Zeekr to ensure that Volvo's '561' project receives the most optimal resource allocation."

In the luxury market above 500,000 RMB, D-segment sedans are usually the first carriers for a brand's top-tier technologies and forward-looking concepts, as well as the preferred choice for state guest receptions and business scenarios. Therefore, although sedan sales volume is not as high as that of SUVs, they are globally recognized as the luxury anchor point.

Over the past three decades, this market segment has long been monopolized by the Mercedes-Benz S-Class, BMW 7 Series, and Audi A8. Domestic D-segment executive sedans are almost non-existent, with occasional brand attempts that failed to shake BBA's established position in terms of product popularity and sales.

In 2025, Huawei and JAC jointly launched the Zunjie brand, with its first model being the S800, a D-segment executive sedan priced between 708,000 RMB and 1,018,000 RMB.

In August of the same year, the Zunjie S800 began large-scale deliveries, with over 1,000 units delivered in the first month. In December 2025, 4,376 units of the Zunjie S800 were delivered, surpassing the combined sales of four classic models: the Mercedes-Benz S-Class, BMW 7 Series, Audi A8L, and Porsche Panamera in that month.

The breakthrough created by the Zunjie S800 through electrification and intelligence has rekindled automakers' ambitions for the D-segment executive sedan market.

Volvo Seeks Changes: Downsizing Dealer Network and Approving New D-Segment Car Project

Over the past decade, SUVs have supported Volvo's fundamental market performance in China.

In 2013, the mid-size SUV XC60 achieved localized production. This model grew rapidly after launch, becoming Volvo's absolute best-seller in China, contributing 40% of the brand's annual sales for years, and directly making China Volvo's largest single market worldwide.

As a result, Volvo naturally launched its electrification transformation with SUVs. Since 2020, the XC40 Recharge, EX30, and EX90 have been introduced one after another, followed by the plug-in hybrid model XC70 in 2025.

The five years of Volvo's electrification transformation have also witnessed tremendous changes in China's automotive market, with the new energy penetration rate surging from 5% to 53.9%.

In an era where one out of every two cars sold is electrified, the XC60 still ranks first in Volvo's sales chart in China, followed by the XC90. These two fuel-powered SUVs together account for half of the brand's total sales.

In 2023, Volvo's annual sales in China reached 170,000 units, marking the brand's peak performance. However, the overall fuel vehicle market in China has been gradually shrinking. In the first half of 2026, China's fuel passenger vehicle sales fell by 26% year-on-year, with a 38.9% monthly decline in June, reducing the total market share of fuel vehicles to 45%.

Volvo China, which relies mainly on fuel vehicles, recorded sales of 53,000 units in the first half of 2026, a 27% year-on-year decline. In the increasingly competitive luxury car market, Volvo urgently needs a transformation.

36Kr has exclusively learned that Volvo launched a dealer network downsizing plan in 2026.

A dealer told 36Kr that in 2025, their single store could still maintain monthly sales of 30 units, but the monthly operating cost reached 600,000 RMB, with some marginal outlets recording an annual net loss of nearly 2 million RMB at one point.

"How did we achieve sales in the past two years? The XC60, which cost over 300,000 RMB to acquire, has been continuously discounted, dropping to a minimum of 220,000 RMB per unit by 2025. Subsidies and rebates are far from enough to cover the price difference. We lose money on every car sold, and stores with low sales volume are also laying off employees," multiple dealers told 36Kr.

Channel downsizing can stop the bleeding, but product breakthroughs are the only way to generate sustainable revenue. The "561" project is Volvo's key move to break through the current predicament.

New China-Specific Car: Fully Embracing Geely

In March this year, Li Shufu asserted at Volvo's annual general meeting that "isolated operations will eventually be eliminated." Today, Volvo's new energy transformation in China continues to validate this statement.

Volvo's electrification transformation started with the CMA platform, a compact architecture jointly developed by Geely and Volvo, which gave birth to Volvo's first pure electric car XC40, as well as models under Geely Group such as the Lynk & Co 01 and Monjaro.

In 2022, Volvo launched its own pure electric flagship platform SPA2, with the EX90 large pure electric SUV as its first model. As the pure electric evolution branch of the classic SPA architecture, the core technologies of the SPA2 platform, from the three-electric system to intelligent driving, are firmly controlled by the R&D center in Sweden.

In 2023, Volvo attempted to directly leverage Geely's platform, developing two new models on the SEA vast architecture: the small SUV EX30 and the luxury MPV EM90.

By 2025, the Volvo XC70 was launched, officially bringing the SMA platform for hybrid vehicles to the market. This platform is still defined by Volvo, but the powertrain and chassis modules have extensively reused Geely's mature technologies.

A source close to Volvo revealed to 36Kr that Volvo's Swedish R&D center is currently working on new platform vehicle developments, but none of them include localized models tailored for the Chinese market.

All signs indicate that Volvo's new global division of labor model has been basically finalized: the Swedish headquarters conducts independent R&D focusing on the European and American markets; the China region relies on Geely's technology ecosystem to specialize in China-customized vehicles.

Following this top-level design, Volvo China has recently implemented multiple organizational structure adjustments.

In mid-2025, Volvo disclosed to the media that it had completed a round of layoffs affecting 283 employees in China. At the end of the same year, Volvo China launched an expatriate repatriation program, with a large number of Swedish expatriate employees returning to Sweden one after another.

At the same time, an implicit collaboration mechanism is taking shape internally.

Some of Volvo China's procurement and R&D teams are required to travel between Shanghai and Hangzhou every week to align work and collaborate with Geely's teams in Hangzhou.

An insider revealed to 36Kr that some team leaders have even stated internally that "for remaining Volvo employees, their work methods and rhythms must now be fully aligned with Geely's standards."

In May this year, Volvo China witnessed a key personnel change: Duan Jianjun, former President and CEO of Beijing Mercedes-Benz Sales Co., Ltd., officially took over Yuan Xiaolin's position as the top leader of Volvo Greater China, taking full charge of the entire product, R&D, supply chain, and sales value chain in the Greater China region.

The real highlight of this leadership transition goes far beyond the personnel change itself.

After taking office, Duan Jianjun simultaneously joined Volvo's global core decision-making circle and reports to Volvo China's board of directors. This means that Volvo China may gain more leading authority in product definition – from vehicle planning and black technology implementation to development pace and supply chain selection, the China team will for the first time have a more complete decision-making closed loop.

An insider revealed to 36Kr that Duan Jianjun's core challenge after taking office is to leverage Geely's technical resources to boost Volvo's sales and restore its premium brand image, and the "561" project is his and Volvo's key answer sheet.

For this project, Geely even pressed the pause button on similar models of its sister brands. The "561" project will not only access Geely's top intelligent driving and intelligent cabin technologies, but also occupy the flagship position in Geely's product system.

Everyone is aware of the significance of this vehicle: it needs to help Volvo maintain the threshold of a luxury brand, reverse the declining sales trend, and even become the "technical template" for all subsequent new Volvo models.

In 2013, Håkan Samuelsson, then CEO of Volvo Group, publicly stated: "We currently have no plans to launch a model at the same level as the Mercedes-Benz S-Class, BMW 7 Series, and Audi A8, and this possibility may never exist."

Volvo, founded in 1927, is about to celebrate its 100th anniversary. After a century of development, this Swedish brand has finally broken its self-imposed restriction of "not entering the D-segment executive sedan market." Behind this courage lies Volvo's fundamental transformation from "Volvo of Sweden" to "Volvo of China."

At present, Geely has invested top-tier resources, and Volvo China has obtained unprecedented autonomy. From resource injection to organizational restructuring, Geely and Volvo are clearly fully prepared.