SHANGHAI - The parent company of Geely Automobile Holdings Ltd said on Thursday it plans to buy Chinese special vehicle maker Zhejiang Zhongyu Automobile Co as it moves to expand its product portfolio.

Zhejiang Geely Holding Group, which is close to a deal to buy Ford Motor Co's Volvo cars unit, gave no financial details for the purchase of Zhongyu Auto, a small manufacturer in eastern China that also makes premium multi-purpose vehicles.

China is encouraging consolidation and the development of a few national champions in its highly fragmented auto sector, now crowded with more than 100 automakers including Zhongyu Auto, which has planned capacity of only 25,000 vehicles a year.

Geely, China's 10th-largest car maker, sold about 330,000 vehicles last year.

Geely said it would use Zhongyu Auto's existing facilities and technology to develop its own premium passenger cars, multi-purpose vehicles and special-purpose vehicles.

Geely also plans to build a crash test center with initial investment of 350 million yuan ($51 million).

Zhongyu Auto, which makes special-purpose vehicles based on technology from Daimler AG, was set up in 2004.

Zhongyu Auto is currently owned by Zhejiang Zhongyu (Holding) Group.

($1=6.826 Yuan)

(Reporting by Fang Yan and Edmund Klamann)

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