Many assumed it was a disaster in the making when Geely Automobile Holdings Ltd. -- a little-known Chinese car maker with virtually no international experience -- bought Sweden's Volvo Cars from Ford Motor Co. in 2010.
Seven years later, Geely and Volvo are both motoring, and inspiring other Chinese auto makers to take the same road.
Great Wall Motors Co.'s interest in buying the legendary Jeep brand from Fiat Chrysler Automobiles NV is being seen as a bid to realize its global ambition -- an ambition that analysts are taking seriously in part because of the success of the Geely-Volvo marriage.
"Volvo is certainly much better off than it was under Ford," said Janet Lewis, Macquarie Capital Research's managing director of equity research.
Great Wall said Tuesday that it was still evaluating a move for Jeep or Fiat Chrysler itself. Amid speculation over its plans, the Hong Kong stock exchange suspended trading of its shares.
Acquiring a marquee name like Jeep would help Great Wall in its long-running rivalry with Geely, which as of late has taken the lead. A unit of Zhejiang Geely Holding Group Co., the company recently took control of a second foreign auto maker, Malaysia's Proton.
Last week, Geely said first-half revenue more than doubled to $5.88 billion, with profit up 128% to $739 million. Auto sales were up 89% to 530,627 more than it sold in the whole of 2015.
Geely is significantly outperforming the Chinese passenger car market, which grew only 1.6% in the first six months of this year.
"Right now Geely is in a class by itself" among Chinese auto makers thanks largely to its technology connection with Volvo, said Michael Dunne, president of consultancy Dunne Automotive.
China has scores of domestic car makers, most of them state-run: They are broadly considered mediocre by industry analysts. Many operate joint ventures with foreign auto makers, but that structure has proved an ineffective means of absorbing advanced technologies.
In contrast, buying Volvo proved a transformative moment for Geely, Mr. Dunne said, plugging the privately owned car maker into the Swedish outfit's world-class resources, while handing the Hangzhou-based firm a ready-made global sales and manufacturing network.
"Volvo has been a strong teacher and brother to Geely Auto," said a Geely spokesman, partly attributing technology and supply-chain sharing to the recent strong performance of both brands.
The turnaround wasn't instantaneous. Volvo was languishing when Geely bought it from Ford, and it took several years for its integration with Geely to start paying dividends.
Volvo's sales increased by 25% between 2013 and 2016, and grew 8.2% in the first half of 2017.
So far, Geely still is the only Chinese automotive company to have pulled off the takeover of a major foreign car maker.
That could soon change, now that Great Wall, a with sport-utility vehicle specialist, is circling Jeep.
Great Wall has been open about its global ambitions for years, but it has made relatively little headway outside China: only 1% of its 1.07 million sales last year were made in foreign markets.
Great Wall's interest in acquiring Jeep is seen by many as a "very logical move" said Yale Zhang, managing director of Automotive Foresight, a Shanghai auto consultancy.
"If they can buy Jeep, they get the brand, the products, the R&D, and the foreign distribution channels," he said.
In the tussle between China's two top privately owned auto companies, Great Wall fell behind Geely in terms of deliveries for the first time in the January to June period, selling 460,743 vehicles, up 2.3% year-over-year.
Geely's sales surged thanks in part to popular new SUV models that ate into Great Wall's once-dominant share of the popular segment. In response Great Wall heavily discounted some vehicles in the first half of the year, causing its profits to halve to $373 million.
A swoop for Jeep would certainly change the complexion of Great Wall's operation, said Ms. Lewis. "Overseas M&A is the best route to survival," as Chinese car makers struggle to achieve sufficient scale and technical quality to match foreign rivals, she said.
The $1.8 billion that Geely paid for Volvo at a time when Ford was desperate to divest noncore assets is now widely seen as a bargain in the auto industry. Jeep is unlikely to come so cheap.
Even so, Great Wall has consistently been one of the most profitable auto makers in China, and should be able to finance the takeover should Fiat Chrysler agree to the sale, Mr. Zhang said.
A Chinese acquisition of Jeep could face regulatory and political hurdles. Fiat Chrysler said Monday it hasn't been formally approached. Great Wall confirmed its interest Monday but hasn't made any additional statements since then.
Write to Trefor Moss at Trefor.Moss@wsj.com
(END) Dow Jones Newswires
August 22, 2017 10:57 ET (14:57 GMT)