The Wall Street Journal reported today that Geely has offered Ford $2.5B for Volvo, making the Chinese automaker the “leading contender” for the Swedish brand. Leading? Are there other contenders we don’t know about? According to the WSJ, “the offer is higher than Ford or outsiders had expected for a brand that has lost more than $1 billion in recent years,” and yet the latest news from China [via Xinhua] has Alan Mulally saying there’s been “no new progress” in the ongoing negotiations. Now don’t get it twisted: nobody expects Mulally to publicly accept this kind of offer within hours of being reported, but you’d think he’d at least send encouraging signs. Instead Mulally tells Xinhua, “Volvo is a good brand, but Ford will sell it in order to shift its main focus on developing the Ford brand.” Which is like someone on Craigslist talking about the sentimental value of an item with the words “or best offer” attached to the asking price. The fact that Geely has made an offer for 100 percent shows that they’re serious (that used to be a Ford negotiating point). So what’s Big Alan waiting for? Offload the money-loser, snag some cash and move on. The deal doesn’t look to be getting any sweeter.
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I think Mullaly’s right to act cool on Geely’s bid. Geely are paying full price for a marque which is a bit of a dodo. Which shows to me that Geely are anxious to lay their hands on Volvo. And considering Geely are the only bidder, why shouldn’t Mullaly act cool?
It’s not as if Geely are prepared to walk away, judging by their tender….
I’m probably in the vast minority on this, and I understand that in this environment, every auto maker needs to lose dead weight…
But as a Ford fan, I’m kind of sad about the Ford/Volvo bust-up…I thought the Volvo DNA exchange was a fairly good match for Ford’s domestic products (resulting in good safety, euro suspension tuning, etc.) And Ford provided the financial stability for Volvos’ continued operation.
Was also sad to see Jaguar/Land Rover go to Tata. With the recent products unveiled, it seemed like Ford may have finally, FINALLY begun to reap some benefit to acquiring Jaguar, but then again, with this global recession, to much red ink was still flowing. Tata could prove to be a good steward to Jaguar’s continued existence, we’ll see.
Geely, I’m not so sure about. Take the money and run, I guess.
As they say, “The Devil is in the details”, and I expect that there are some nasty little demons lurking in the fine print of Geely’s offer. Mulally has good reason to remain aloof until the lawyers and accountants go over the whole deal.
+1 ClutchCarGo.
With Geely offering to buy “100%” of Volvo, the devil may be in the patents and technology transfer, very important details indeed. The U.S. dealer network and parts distribution would make Geely a player, in fact, a competitor in the U.S. market right away with Volvo models, and later with imports from China, once the technology has been applied. If Ford had been able to get Volvo to break-even, a spinoff would have been better than a sale.
In a normal competitive situation, Ford would jump on this opportunity… But then, if the taxpayer will pay the bills anyway, why sell?
sfdennis1,
only one area where I’d disagree – the good suspension tuning is all Ford, as driving any of the Volvo products even today (and back to back with their Ford platform mates) shows.
Actually, aren’t most of the good Fords based on modified Mazda platforms or global architecture? Haven’t the Ford D3 products all been…well colossal failures?
“The fact that (The Chinese) Geely has made an offer for 100 percent shows that they’re serious”.
Actually, if you have ever dealt with the Chinese, it doesn’t mean a thing, nor does anything else. Until 100% of the cash is in escrow with a lawyer, who is Ford’s lawyer, and there are no ‘conditions’ whatsoever, it isn’t even newsworthy. Opel is an example of the stereotype. North Korea is another example of the style of doing things.
Maybe Ford should have slipped a few Volvos onto their Ford lots to show the Ford customers what they were missing. Folks that that might otherwise not visited a Volvo lot.
I think the brand splits are hurting Detroit more than helping these days.
In typical Ford fashion they are dragging their feet on a sure thing. Not surprising as Mulally hasn’t made a good move since he has been there. All of their cars stink (except the proper rear wheeled drive Crown Vic :) ) and they have no chance to survive. The only thing Ford have gotten from Volvo is the rotten D3 platform which has produced awful clunkers like the Taurus and Lincoln MK Taurus. Bring back the ’71 Crown Vic !
I’d mostly echo what sfdennis said, but only wish that someone could take Volvo back to what it once was on the verge of being. The last time I saw what the Fomoco association had done to Volvo interiors, I kinda came to the sad conclusion that nothing could save it.
umterp85 . . .
I suggest you visit your local clergyman, as you seem to have been possessed by another regular commentator.
ClutchCarGo +1
Not to get argumentative, but you’re ‘bid’ when trying to buy, and ‘offered’ when trying to sell. As in ‘Geely BID $2.5b for FoMoCo’s Volvo subsidiary.’
I would have figured that the WSJ would know the difference.
Mullaly is clueless. I like the Mustang a lot though, so Ford has one car I like, and would buy. I do own an 06 which is terrific.
umterp85 :
September 26th, 2009 at 9:58 am
In typical Ford fashion they are dragging their feet on a sure thing. Not surprising as Mulally hasn’t made a good move since he has been there. All of their cars stink (except the proper rear wheeled drive Crown Vic :) ) and they have no chance to survive. The only thing Ford have gotten from Volvo is the rotten D3 platform which has produced awful clunkers like the Taurus and Lincoln MK Taurus. Bring back the ‘71 Crown Vic !
P71’s twin, perhaps?
LOL
ClutchCarGo :
September 25th, 2009 at 11:01 pm
As they say, “The Devil is in the details”, and I expect that there are some nasty little demons lurking in the fine print of Geely’s offer. Mulally has good reason to remain aloof until the lawyers and accountants go over the whole deal.
Bingo. One wonders what Ford trade secrets Geely wants for the $2.5 bil.
In the long run..
This (Volvo) has been a GIANT failure for FORD. Nasser thought it would make Ford look great with PAG attached.. just as long as ya dont look behind the curtain.
L.R was a mess.
Jaguar was a disaster.
And Volvo… they cant make a dollar from that mess yet they PILLAGED every frame and every safety / security feature it has to offer.
SO in the end.. VOLVO loses on both ends.
Maybe FORD is having misgivings about actually accepting FAILURE! The fact that they threw hundreds of millions / billions of dollars.. RIGHT OUT THE WINDOW.
You know, I am sick of people alluding to how Detroit ruined the Swedish makers. If Volvo and Saab had been so great as some on here seem to say they would have had no need to sell out. Fact is all GM and Ford did was postpone the enevitable failure of two niche automakers that by and large produced substandard products. Yes, the die hards will flame away here but anyone that says Saab built quality before the GM takeover has never owned a pre-GM Saab or is smoking something that is readily availible on the college campus they probably teach at. As for Volvo, they were somewhat better…but quirky FWD vehicle at BMW prices do not a successful auto maker make. Flame On.
I wouldn’t be surprised to see Ford end up keeping volvo, they aren’t in the financial position that they have to screw themselves to get the money. Geeley isn’t after volvo per se but rather platforms and engines and without specific licensing agreements I don’t think ford is going to trade thier new global B, C and C/D platforms and associated engines (as well as a US/Euro dealer network).
It never ceases to amaze me how many people think they can make a smarter call than the CEO of a big corporation when they don’t have all the facts in front of them. I read that WSJ article last week and it made perfectly clear that the sticking point for Ford was that Geely wanted to leave behind all the pension liabilities, and Ford did not want to give up all their IP rights to the Chinese.
$2.5Bn is small beer compared to those kind of risks IMO and clearly Mulally thinks it worthwhile to continue to negotiate.