Volvo Sale Complete
Aug 02, 2010
An iconic Swedish brand is now officially under Chinese ownership.
"Geely Holding Group completed its acquisition of Ford Motor Co.'s Volvo unit Monday in a $1.5 billion deal that gives the small-but-ambitious Chinese automaker a global brand and huge management challenges," writes the Associated Press.
ABC News reports, "Geely's plan includes using the Swedish nameplate to produce luxury brands in China, which passed the United States last year to become the world's biggest auto market, while maintaining its operations in Europe to supply the international market."
"Geely paid $1.3 billion in cash today and issued a $200 million note for the acquisition, Dearborn, Michigan-based Ford said in a statement. Stefan Jacoby, Volkswagen AG’s former U.S. chief, will succeed Stephen Odell as Volvo’s chief executive officer, Geely said in a separate statement," says Bloomberg.
While Volvo allows Geely to tap into the burgeoning luxury car market in China, the challenges the brand faces are steep. Last year, Volvo sold 334,000 cars, but reported a loss of $653 million. In fact, Jalopnik points out, "In 1999, Ford paid $6.5 billion for Volvo. Today, Ford sold Volvo to Zhejiang Geely Holding Group for $1.8 billion — a loss of over 72%"
For Volvo buyers, little should change in the near term. "Under the terms of the sale, Ford will continue to supply Volvo with everything from powertrains to stamping systems and other vehicle components for differing periods of time. Additionally, Ford and Geely have come to an agreement on intellectual property usage, with Volvo allowed to grant sub-licenses to specific systems to third parties, including Geely," writes Autoblog.