Chinese company buys Volvo for $1.8bn

[Norton]

Geely buys Volvo for $1.8bn

By John Reed in Gothenburg and Andrew Ward in Stockholm
Published: March 29 2010 08:53 | Last updated: March 29 2010 08:53

Ford Motor signed a $1.8bn deal to sell its Volvo brand to Geely on Sunday in a move seen as emblematic of the shift in the global car industry’s centre of gravity from the US and western Europe to China.

The transaction, signed in Sweden, will see Zhejiang Geely Holding Group, the parent of the Chinese carmaker, acquire 100 per cent of Volvo and its assets. Geely said the deal would nearly double its sales to 600,000 in five years, largely by building market share in its home country.

The deal marks the largest acquisition of an overseas carmaker yet by a Chinese company, and is China’s biggest foray into ownership of a big luxury brand. Ford and Geely said they expected the deal to close in the third quarter of this year, pending regulatory approvals.
Geely vowed to maintain Volvo’s manufacturing presence in Europe, where it has two car plants in Sweden and one in Belgium, but said China would become “Volvo’s second home market”.

Li Shufu, Geely’s chairman, likened the Gothenburg-based producer of famously safe and solid estate cars and executive sedans to a “tiger” in a zoo that would be freed to pursue new opportunities. “We need to liberate this tiger,” he said.
The deal ends more than a year of uncertainty for Sweden’s car industry since Volvo and Saab were put up for sale by their US owners. General Motors sold Saab to Spyker cars of the Netherlands last month.

Ford said the sale of Volvo would net it “significantly” less cash than the $1.8bn sale price because of adjustments to be made for pension deficits, debt, cash and working capital at the deal’s expected closing date.

Geely, which is mindful of protecting Volvo’s premium image even as it shifts more of its operations to China, said it intended to run the Swedish carmaker as a separate company with its own management team based in Gothenburg and a new board of directors.

Ford paid $6.45bn for Volvo in 1999 when it was split from the truck-making group of the same name. It was profitable then, but has lost money ever since.

Geely did not say how it planned to finance the deal but, according to a person briefed on its business plan, it has lined up financing from Chinese state institutions and provinces where it plans to build at least three plants.


FT.com / UK - Geely buys Volvo for $1.8bn

[peterpan]

Geely buys Volvo for $1.8bn

.
Geely vowed to maintain Volvo’s manufacturing presence in Europe, where it has two car plants in Sweden and one in Belgium, but said China would become “Volvo’s second home market”.

Sure And the Chinese never Lie do they?

[Norton]

At the rate auto sales are increasing in China, we all know Europe will quickly become the secondary market.

it has lined up financing from Chinese state institutions and provinces where it plans to build at least three plants.

No surprise here. Chinese gov is committed to building it's auto industry.

[JoeMoer]

Pretty inexpensive technology transfer.

[Beadle]

the shift in the global car industry’s centre of gravity from the US and western Europe to China.

When did this happen? All the best models from the top marques are still made in Europe; Porsche, BMW, Mercedes, Audi, Ferrari, Lamborghini, Aston Martin to name but a few.

[Norton]

When did this happen?

"Center of gravity" an ambiguous term. Market and potential future sales growth in China far exceed those in Europe or the US. Volvo will do well in China. Demand is out stripping supply in up scale/luxury brands.

[BobR]

If the 2011 Volvos virtually implode like a Cherry Car during the European and American crash barrier tests, we'll know the Chinese have been screwing with the designs.
Being owned by the Chinese cannot be much worse then being owned by Ford, they've been selling absolute crap in America for years.

[TSR2]

china eh , the beat goes on.

Fckg clever these Chinese we joked 50 years ago

It ain,t a joke anymore

[jandajoy]

I find it rather sad.

I've owned a number of Volvos over the years.

All old estates.

They've all been splendid.

The last one was used to haul a trailer with all my worldly possessions, including a BMW 100 RS, backwards and forward twixt Plymouth and central Italy.

I must have down at least 15 trips.

It, the Volvo, never let me down once.

Terrific work horses.

I fear the end of an era.

Again.

[Norton]

I fear the end of an era.

Comes with age JJ.

I said the same when the first Toyotas and Datsuns hit the streets of the US in the late 50s. Japanese junk.

[jandajoy]

Comes with age JJ.

I guess you're right there, Mate.

Bloody good vehicles though.

[TSR2]

Trouble was in Europe the sales were not economic even though they were better than average quality built,

Ford spent a fortune on Volvo as they did with Landrover Group improving their quality, Same story with Jaguar

To no avail,

No profit , just a big black hole for your money,

[billy the kid]

The criminals favourite car ,,, gone to china. No big deal except that Ford lost a few billion $'s.

[Tom Sawyer]

Does this mean that the interiors of all new Volvos will be chemically engineered to smell like mothballs? And will the seats be redesigned to fit the square ass of Chinese women?

[Loy Toy]

Will this mean that those arrogant "Sunday Drivers" who invariable drive a Volvo won't buy them no more and in turn stay off the road.

If this is the case I am in full agreement with the transaction.

[larvidchr]

Will this mean that those arrogant "Sunday Drivers" who invariable drive a Volvo won't buy them no more and in turn stay off the road.

If this is the case I am in full agreement with the transaction.

I think you are out of luck on this one Mate, on the contrary there will probably be millions more before you know it, it's a secret Chinese armament plan, every Man his own battletank

[Loy Toy]

^ Ohhhhhhhhh shit........................arrogant cvnts!

[baldrick]

IBM sold its laptop division to a chinese manuf and they are now called Lenovo and they are still a good brand of laptop.

[Marmite the Dog]

IBM sold its laptop division to a chinese manuf and they are now called Lenovo and they are still a good brand of laptop.

For now.

[AntRobertson]

I said the same when the first Toyotas and Datsuns hit the streets of the US in the late 50s. Japanese junk.

And who would've thought that 50 odd years and some massive recalls later that you'd be right!

[kmart]

I'm sure the Chinese will keep Volvo's legendary reputation for safety riding high.

(The Chinks seem to actually spend great energies to actively make their products dangerous. It's like "does our product contain any lead-painted; child's-throat-sized-loose-parts; malamine-tainted; inflammable properties?"
"No. Then let's install a tray on the end of the production line filled with a radioactive death sauce to dip the parts in, before packaging. Hurrah!").

[Norton]

IBM sold its laptop division to a chinese manuf and they are now called Lenovo and they are still a good brand of laptop.

A valid point. The majority of auto assembly is done with robotics. The production facilities for Volvo's new plants in China will be the same as those in Europe, use the same robototics, CAD/CAM programs and approved parts suppliers. No reason they will be of inferior quality.

[Loy Toy]

These vehicles will be manufactured in a high pecision, three dimensional Cad Cam driven production environment and if tolerances are mantained will fit together and perform perfectly.

The problems will come when the Chinese start to use inferior/ cheaper raw materials such as plastic resins and metal alloys and the quality will suffer dramatically. The car will still work within an acceptable safety window but will look shit and I predict within 5 years you will notice a decline in the general finishing of the Volvo's produced in China.

[Marmite the Dog]

^ And the new models will be crap.