DEARBORN, Michigan — Ford Motor Company said Wednesday that it has settled "all substantive commercial terms" related to the proposed sale of its Volvo Car subsidiary to Chinese automaker Geely.
Ford and Geely now expect to sign a definitive sale agreement in the first quarter of 2010, pending government and financing approvals, with the final transfer of Volvo expected to take place in the second quarter, Ford said.
In a statement, Ford said a sale to Geely "would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core One Ford strategy."
Ford said it does not plan to retain a stake in Volvo after the sale, although it will "continue to cooperate with Volvo in several areas."
Analysts in Europe and China estimated the sale price at $1.8 billion to $2.0 billion. Ford paid nearly $6.5 billion to acquire Volvo in 1999. The Swedish company has lost hundreds of millions of dollars over the past two years.
Inside Line says: Meanwhile, the fate of Saab hangs in the balance at GM. — Anita Lienert, Correspondent
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dino6 says:
08:03 PM, 12/23/2009
Ford seems to be an expert in Buy High, Sell Low!
FoMoCO has the habit of not putting in the necessary engineering resources and investment into their acquisitions until it is too late - meaning until they almost have to sell it.
Jaguar and Land Rover was sold by Ford to Tata right after they made great investments in it, and now the 2 brands have terrific product lines but are still losing money due to loss of brand equity over the Ford years.
In the Volvo case, the Chinese will get an even better return on their investment since Volvo has great styling and engineering at the moment and their brand equity has held up better than Jaguar and Rover.
Since a number of important Ford platforms such as the Taurus/MKS/Flex/MKT/Edge/MXV are Volvo based, Ford will inevitably have to spend money to change them over to new platforms on their next generations.
It is amazing that all the theoretical platform sharing synergies that Ford had with Volvo was still unable to make Volvo profitable as a unit. Perhaps managing accounting cost allocations had something to do with it.
And also implies that for Geeley to make money on Volvo will mean moving much of their production to China to lower cost. What will that do to the Volvo identity and market appeal as a Swedish brand?
autoboy16 says:
01:06 PM, 12/23/2009
I think ford and volvo have come a long way together! I just think ford hasn't enough effort into the volvo line. The previous S80 went from 1998-2007 unchanged! The s60 from 2001-2009. The only real products that came of this for Volvo were the XC90 in 2003, S40/V50 in 2004, C70 in 2006, and S80 in 2007. Sure there have been some changes, but the majority of it happened in the last few years of that 10/11 year ownership. That and Volvo never got the "cool" technology such as Ford's Vista Roof, Ford's Sync, or even ford's ecoboost engines. ALL of which would have been great for Volvo!
Personally, i think the C30 stands a STRONG chance at being my next car so hopefully Ford doesn't kill it completely like GM plans to do with Saab.
firstclass says:
09:49 AM, 12/23/2009
With GM there are many customers and dealerships left in the out in the cold wondering what will happen next. I hope GM is watching and makes the deal with Spyker to acquire Saab. Ford realizes it has a moral obligation to Volvo not just a monetary obligation to itself as the parent company.
And before anyone points it out I know ford uses technology from Volvo cars. But still I doubt this deal was purely financially motivated or motivated by product sharing between Ford and Volvo.