As predicted various times on TTAC, Volvo has finally been sold to China. Ford said in a statement that it had agreed to all substantial commercial terms in a deal to sell Volvo to China’s Geely Holding Group, parent of Geely Auto, Reuters has on the wire.
“While some work still remains to be completed before signing, Ford and Geely anticipate that a definitive sale agreement will be signed in the first quarter of 2010,” Ford said. Final closing on the deal is expected for Q2 of 2010.
Volvo changes hands for an estimated $1.8b. This makes it by far the largest overseas acquisition by a Chinese automaker. Ford is getting a nice chunk of money for its cash hemorrhaging Volvo unit, they are selling Volvo whole, not piecemeal as in Saab and GM.
Supposedly, the Chinese symbol for “crisis” is the same as for “opportunity,” although some people debate that. Whatever it may be, China is making the best out of the crisis. Its car market is exploding at sometimes triple digit rates. China has long surpassed the US as the world’s largest auto market, and is expected to close out the year with more than 13m vehicles sold. With Chinese patience and bargaining skills, they are buying unloved assets on the cheap. The target: Close the technology gap, and be a viable player in the export market. They’ll get there. A country that can put people in space, a country that can finish an 800mile high speed rail link (80 percent on bridges) between Beijing and Shanghai within 4 years (New York’s 8 mile AirTrain took a year longer to build, and it ends in Jamaica,) that country will eventually be able to build cars that are not a laughing matter.
Volvo is a big step in that direction. With Volvo, Geely buys a brand that stands for safety, and most of all, they are buying a series of homologated and internationally certified cars. At a lower price point, Volvo could just be the key to open China’s car exports.
given the circumstances, this is the best outcome. my mother had 3 volvos over the years and i’ve had one. if i had to buy a car tomorrow, it would be a second hand xc60. my current xc70 should be good for several more years. when it comes time to replace it, the main thing i will be looking for is a car that is still designed and assembled in sweden. people talk a lot about volvo engineering and safety which is first rank but i strongly believe that the key is the build quality. Chinese volvos are ok for china but mine better come from Goteborg.
Your next new Volvo might be “assembled” in Goteborg, but how many parts will be Chinese?
Don’t feel badly; a friend who has (correction: had) a 5 year old Buick Rendezvous grenaded his transmission and is sending it to the junk yard. He’s spent thousands extra on the car over the years because he could not afford a reliable car (in his words) a Toyota Highlander.
I explained to him that the Rendezvous was assembled in Mexico with a Communist Chinese engine (and for all I know, transmission) – he said that explained a lot!
Maybe a nice Subaru….. built in Indiana?
My Volvolust ends in 1998. The Ford/Mazdafication produced some decent cars, but the soul was gone. If it isn’t RWD and can fit a vintage Leslie organ speaker in the back, why bother?
Good for Ford for freeing up the cashflow.
While Volvo may be the best brand a Chinese company could have bought, I still have to commend the people at Ford who are responsible for this. As GM has managed t0 offload exactly none of their dead and dying brands, Ford somehow brought in $3.8 billion dollars for Land Rover/Jaguar and now Volvo. These are brands which have cumulatively lost Ford on the order of $20-40 billion since they acquired them. If that isn’t some of the best salesmanship of all time I don’t know what is.
Like the Hummer deal it may be a bit premature to announce a done deal before the closing and contracts are signed. It has been reported that Hummer was sold as if its done and it is still not.
If this deal is done, it will be interesting to see what Geely does with it.
Will it give Volvo a cash injection, let the Swedes develop interesting and competetive truely European cars for the world market, and use their design and tech developments for their home market, or will Volvo begin to morph into a Hyundai – competant popular appliances with Chinese parts for the mass market of grocery-getting cars buyers.
I wonder how long it’ll be before Geely would pack up everything and move it to China. I don’t think any Volvo driving American would buy a Chinese made Volvo. But i could be wrong.
The argument about certain countries producing shoddy goods is becoming more and more irrelevant. Any country that can build a nuclear power station could probably build a decent car if the will, price point and quality control was present. A Chinese volvo may be quite a good deal. I wonder how many components of the current volvos are made in china???
I wonder if the deal includes the state of the art crash-testing center. Geely could make good use of it.
http://www.youtube.com/watch?v=j1Wy4tO9azo
I don’t think the quality of Chinese made Volvo’s could get any worse than the 1974 Volvo’s when they opened the plant in The Netherlands. I remember the complaints back then, and how Volvo had completely torpedoed their quality reputation in one year.
This is modest financial news for Ford, but excellent news regarding core brand activities. Volvo was a distraction and I expect Ford pulled in the engineering they needed, so they’ve had “value”.
It’s bad news for Volvo; the Chinese will have to be extremely careful with how they change the direction of the company (if at all). Poor Chinese quality perceptions are going to take generations to wane, and as GM proves, you don’t get “generations” of time to undo it.
But as Hyundai has proven, if you just shut up, put your nose to the grindstone and stand behind your products, you can erase even the worst of memories and perception.
That’s by churning out new products every other month…
Ford is having an easier time selling its non-profitable sub-brands because, unlike GM, while Ford did not really profit from them, it poured a lot of money into making good cars with them.
You’re making the right moves Ford. Now, close Mercury. It’s not needed, and it’s devaluing your Lincoln dealerships. Lastly, reconsider just how apart you want to be from Mazda. Don’t let success make you cocky.
Most of the West forgot when Japanese cars were disliked and discriminated for copy cats and made in the East. The American cars lost their grounds, too heavy, too big and too much gas consuming.
After many years, Japanese has won their ability, quality, safety and good pricing. Toyota indeed was one of the 1st to get this reputation. Than Honda won their reputation on F1 races.
Volkwagen bought SEAT and not many people bought the Spanish version of VW. But have a look now how SEAT is doing?
VW bought Skoda. Who wanted to drive in a East European Volkwagen? Yes! Now a days many drive Skodas. Even in Germany Autobahn these Skoda’s are very popular.
Porsche? It’s Volkwagen now! Jaguar? It’s Tata now. Volvo? Chinese owns them, so what? Look in your house and look where they are made? and how many products you own is made in China! Don’t be a Hypocrite ! Give the Chinese to catch up, what they lost during Mao’s time. If Volvo China is going to offer their new collection with 5 year Full Warranty, I will be the 1st to buy and change it every 5 years, just like leasing a car. It’s about service and mobility Not Envy and Jealousy!
“Volvo for Life” that’s their logo.