- Ford has completed the sale of Volvo to Geely.
- The Chinese automaker paid $1.8 billion.
- The sale of Volvo is said to be the largest acquisition by a Chinese auto company of a western automaker.
DEARBORN, Michigan — In a move that finishes the dismantling of its Premier Automotive Group, Ford on Monday said it has completed the sale of Volvo to Zhejiang Geely Holding Group for $1.8 billion. Ford paid $6.5 billion for Swedish automaker Volvo in 1999.
The completion of the sale marks a major milestone for China, which clearly intends to grow in stature as a major player in the global auto community. China's Ministry of Commerce officially gave approval for the sale, with observers noting that the deal had the support of the central government from the beginning.
The sale of Volvo is said to be the largest acquisition by a Chinese auto company of a western automaker. The sale of GM's Hummer brand to a Chinese company fell through in February.
With the sale of Volvo, Ford's Premier Automotive Group — established under former CEO Jac Nasser — is officially dissolved. In 2008, Ford sold Jaguar and Land Rover to Indian automaker Tata for $2.4 billion. The previous year, Aston Martin was sold for just under $1 billion to a group of Kuwaiti investors led by Prodrive founder David Richards.
"We are confident Volvo has a solid future under Geely's ownership," said Alan Mulally, Ford's president and CEO in a statement. "As the same time, the sale of Volvo will allow us to sharpen our focus on the Ford brand around the world."
The deal gives Geely, an independent Chinese automaker, control of a global brand and access to advanced technologies. Given Volvo's longstanding reputation for safety, the acquisition of the Swedish brand could also help allay consumer concerns about the safety of Chinese automobiles.
Geely's statement about the deal on Monday took pains to underscore that Volvo would cling to its Swedish/European roots. Geely said Volvo Cars will "retain its headquarters and manufacturing presence in Sweden and Belgium." It also confirmed that Stefan Jacoby, the former chief executive of Volkswagen Group of America, would become president and CEO of Volvo Cars, as expected. The new Volvo board of directors will be chaired by Li Shufu, chairman of Geely Holding Group. Hans-Olov Olsson, a Swede who was the former president and chief executive of Volvo Cars under Ford, will become vice chairman of the Volvo board.
Ford noted that it has "not retained any ownership in the Volvo business." However, the automaker said it will continue to supply Volvo with powertrains, stampings and other vehicle components. It did not spell out a timeline for that relationship, only saying it will continue doing so "for differing periods." Ford also said it will supply Geely-owned Volvo with "engineering support, information technology, access to tooling for common components, and other selected services for a transition period."
What remains unclear — and may be of most concern to Volvo followers — is who will design vehicles for Volvo. Volvo has long staked its reputation on adherence to the clean, modern lines of Scandinavian design, even if some critics said its look was diluted in recent years by its Detroit-based masters.
Also uncertain is how soon Geely plans to begin expanding production of Volvos in China. Currently, several Volvo models, including a China-only S80L long-wheelbase flagship sedan, are assembled in small volumes by Ford and its local partner Chang'an.
The sale of Volvo appears to put to rest, at least for the time being, the seismic upheavals of Swedish auto brands in the midst of a global recession. Former General Motors brand Saab continues to rise from the ashes — in the words of its new owner, Dutch-based Spyker Cars — with the first boatloads of the new 9-5 just arriving on U.S. shores.
Inside Line says: Can its new Chinese owners retain Volvo's reputation for safety, value and a clean sense of design? Those are the critical questions. — Anita Lienert and Vivian Jin, Correspondents
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drivera1981 says:
07:45 PM, 08/02/2010
hooray, good job volvo
tbone85 says:
05:45 PM, 08/02/2010
We shall see. The Koreans were in business in the U.S. for at least 20 years before they produced a car that I would consider buying. In consumer electronics, Chinese goods are still considered inferior to goods made in Japan, Korea, and (a few) in the U.S. by most consumers even after a 2 decade run. Chinese manufacturers have yet to open a dealership, make a sale, or service a warranty claim. Cars are not commodity consumer goods, and the logistics are substantial. If the Chinese take over the U.S. car market, I doubt it will be 10 years from now. If history is any guide, Chinese hegemony in manufacturing will be as permanent as it was for the Europe, the U.S., Japan, and Korea. The world continues to change.
tmanz says:
08:50 AM, 08/02/2010
it will help geely move up to modern safety and technology quickly.
Remember when most things sold in stores were made in the USA and then things were made in Japan and then a little bit later things were mostly made in Korea and now just about everything in stores is made in China.
Replace "things" with "cars" and they are following the same pattern. 10 years from now everyone will be wondering how a US company could ever compete with cars that are so cheap because they are made in China.
Other car companies are already trading their technology for the ability to sell in China because China generally won't let them in without a trade off like that.
Very smart for China, not so good for the rest of us.
redgeminipa says:
07:32 AM, 08/02/2010
It'll either help Geely, or kill Volvo. This is starting to sound like a Daimler-Chrysler deal. Too bad Spyker couldn't/wouldn't buy Volvo.