Words of wisdom spoken on the eve of the Shanghai Auto Show: “The longer the crisis lasts, the bigger the chance of failure or a scale-down of some American and European automakers.” Words of wisdom from Xu Liuping, Chairman of Chongqing Changan Auto Co. on the sidelines of a news conference. “And that has provided a chance for entry by Chinese manufacturers.” The Chairman politely omitted to add “for pennies on the dollar,” but why stress the obvious. And guess who the Chairman’s company is coveting? “Changan, Ford Motor’s China partner, is among several Chinese auto makers that have expressed interest in the Volvo car brand, which the Detroit automaker is seeking to sell in an effort to raise cash,” writes Reuters. “Asked about progress on a possible Volvo deal, Xu declined to comment, citing disclosure rules mandated by the Chinese securities regulator.” Changan? Doesn’t that ring a (wedding) bell?
Yes, it’s the very same Changan that had been fingered by TTAC as a suitor for Volvo in December. Yes, it’s the same Changan that a day later denied that there’s anything to that story at all. Yes, it’s the same Changan for which snapping up a distressed Volvo makes the most sense.
Quite possibly, Changan is the only auto company in the universe for which buying Volvo makes any sense at all: Changan is Volvo’s joint venture partner in China. Changan builds Volvos for the Chinese market. Changan could immediately turn around and sell Volvos all over the world. Their current joint venture contract prohibits exportation, but once they own Volvo all doors are wide open.
And, yes, it’s the same Changan that said in February it had signed a framework agreement with Autopark Mexico to start making cars in Mexico next year with an initial capacity of 50,000 units. Chairman Xu said Changan could sell cars to North America. From Mexico.
They would probably sell better with a Volvo nameplate and Volvo technology and existing Volvo homologation through an existing Volvo dealer network. What did we say when we announced the Chinese/Mexican tie-up last February? “Could come in handy for Changan’s bid for Volvo.”
Makes perfect sense. Plus, the Chinese government has literally got something like 1.5 trillion US dollars to dispose of by buying up assets.
Right now, China, as a nation, is busy buying up huge amounts of copper, palladium, etc. for storage.
In exchange for soon worth-less dollars. Or hopefully not, but possibly worthless, dollars.
In any case, they’ll have the materiels to proceed as the favored trade partner with any surviving economies with currencies worth trading for in the future.
Put this way; you need copper for wiring in electric and hybrid electric cars. You need rhodium to make catalytic convertors work as 3-way catalysts (platinum alone won’t do it). China already is the major producer of rare earths, as in some 95% worldwide; these are needed for DC permanent magnet motors also used in some hybrid electric cars.
China are no dummies.
The Chinese/Mexican tie-up link is broken. Found the story here:
http://autonews.gasgoo.com/auto-news/1008286/Changan-Auto-to-build-cars-in-Mexico-eyeing-US-market.html
Bertel, how does an initial annual capacity of 50,000 cars compare to Volvo’s current US sales? I could see how manufacturing Volvo’s in Mexico could solve exchange rate and manufacturing cost problems. The obvious question is why didn’t Ford already try this?
SSDD
I have a 2008-2009 Cars of the World book, and in it, Changan has no proper cars listed under their own manufacture. However, online is a different tale.
The car even looks slightly Volvo-esque in a modern sense (and could easily have a Volvo grille added), and therefore it can easily be seen how this could become a Chinese manufactured and Mexican-assembled small Volvo for distribution in North America (NAFTA), alongside Chinese manufactured and possibly Mexican-assembled S80L (long wheelbase bigger Volvos) also sourced from Changan-Volvo.
http://www.globalchana.com/portals/0/product/new_cv8/NewP.html
BTW Changan is also known as Chana. (I don’t fathom Chinese nor do I know the culture so I have no idea why…)
The cars not manufactured in China but manufactured in Sweden could and very probably would still be sold through the Volvo sales network if Changan bought it.
I strongly suspect that within 3 or 4 years, the number of players in the glogal auto industry will shrink dramatically.
@George B: Fixed. Thank you
@menno: Made-in-China (by Changan) Volvos here: http://www.volvocars.com/zh-CN/Pages/default.aspx
Bertel, thanks for the weblink to the Chinese made Volvos. Slightly strange to see a LWB S80, a slight throwback to the specially-made extended Volvo limos (740, 960, S90) of the 80s and 90s, as often seen in funeral processions…
Still hoping that the Swedish government steps in and keeps the brand local, though I don’t hold out much hope considering the folks in Stockholm have turned a blind eye to Saab.