"The biggest problem of Volvo is that its scale is too small," Li said at a press conference last week in Beijing. The event was held right after Li and his top management came back to China from Sweden where they had signed a definitive agreement with Ford Motor Co. on the acquisition of the Volvo car brand.

"I guess it has made a similar amount of investments in r&d as Mercedes Benz and BMW, and that it has accumulated a large quantity of intellectual property and technologies," he said. "But due to its small scale, the average cost of its car is high. That's why it is losing money." 

Li said he needed to find ways to make a full use of Volvo's technologies and to boost its sales. "After we expand scale, the cost of each car will come down and profits will then appear," he explained.

"As long as its annual sales reach 370,000 units, it can return to profit," Li concluded.

Chinese media reported earlier this year that Geely plans to build a plant in Beijing to build Volvo cars, but Li said it is not yet time to disclose where to build new facilities for Volvo. 

A total of 335,000 Volvo cars were sold globally in 2009 including 22,664 units in China. At present, only the Volvo S40 and S80 models are built in China.