China's Geely Completes Volvo Buy

[kotte mafia]

BEIJING/HONG KONG: China's Geely on Monday completed its purchase of Ford Motor Co's Volvo unit, marking China's biggest acquisition of a foreign car maker and reflecting the nation's rapid rise in the auto world.

Zhejiang Geely, parent of Hong Kong-listed Geely Automobile Holdings Ltd (0175.HK), said on Monday it paid $1.3 billion in cash and issued a $200 million note to Ford. That represents $300 million less than the previously reported headline number of $1.8 billion, but Ford said it would get a further "true-up" payment later in the year.

With the deal now done, the real challenge for Geely will lie ahead, as it aims to restore Volvo to long-term profits. Volvo Cars posted revenue of $12.4 billion in 2009 by selling 334,000 cars, but it recorded a pretax loss of $653 million.

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.

The deal was finalized at a handover ceremony in London attended by Li Shufu, chairman and founder of privately held Zhejiang Geely and now also chairman of Volvo.

"We've fulfilled our dream of acquiring Volvo, but that's not the end of our plan; it's only the starting point," Li told Reuters in a London interview. "We've arrived at the foot of a big hill ... We hope and believe Volvo Cars will climb to the top of the mountain."

Li, who said he believes the $1.5 billion will be "very close to the final number" Ford receives, wants Volvo to compete with the costliest sedans of BMW and Mercedes.

Volvo's unions opposed the deal throughout much of the process over concerns that their jobs would be moved to China, but gradually were won over by Geely's promises to keep the brand separate and continue production in Europe.

Reuters

[harshansenadhir]

there goes Volvo safety standards down the drain .. keeping fingers crossed.

[Watchman]

there goes Volvo safety standards down the drain .. keeping fingers crossed.

yeah; I too was thinking of the irony of the safest auto-brand getting into the hands of a bunch known to be the least safe

[harshansenadhir]

yeah; I too was thinking of the irony of the safest auto-brand getting into the hands of a bunch known to be the least safe

exactly, I'm sure there will be a helluva lot impact on the brand name.

[Ripper]

exactly, I'm sure there will be a helluva lot impact on the brand name.

yeah...i mean afaik...safety is almost the only usp they have... folks buy volvos for that..

so far the chinese are not really known to give a hoot about safety...

so what would volvo stand for from now on???? affordability?

[harshansenadhir]

yeah...i mean afaik...safety is almost the only usp they have... folks buy volvos for that..

so far the chinese are not really known to give a hoot about safety...

so what would volvo stand for from now on???? affordability?

it used to be old folks vehicle... and now gonna be common man's vehicle yeah, more of affordability at the compromise of safety. I aint joking and that's the future trend in auto mobile industry from what I see. Indian, Chinese acquisitions and the models they're coming up with.

[Sumiya]

Hi Guys

LOL ,Have to forget about VOLVO too.

I hate these Chinese and indian stuff

thanks

regards

sumith

[jdnet]

yeah; I too was thinking of the irony of the safest auto-brand getting into the hands of a bunch known to be the least safe

I guess they will be making the car using lead instead of steel.

[ae100]

Just thinking out loud.

Would Geely buying Volvo mean that they'll change the standards that were followed by Volvo for ages?? If they've bought the plants, machinery, workforce and the intelligence, then won't they be able to keep the same quality and safety standards?

Obviously the brand value of Volvo will go down (and Geely will go up) from the current situation, but I don't think they'll bring down a Volvo's body thickness down to a Geely's level. (and so on..)

[Tikiri]

Hmmm......

I was in love with Volvo's and used few....

Its a sad state.....

They will of course will hit the mass market with affordability and may easily turn it around

for Profit making, but at what costs of the safety standards and the brand etc...

We should be able to see some new Volvo's on the roads..

[scds]

Future Chinese volvos will have dual ECU's, loud blaring horns, TV, Radio and every conceivable thing crammed in to it and come dirt cheap.

Only problem is the car manuals will have bad English and you have to buy another volvo in 3 months time

[harshansenadhir]

Just thinking out loud.

Would Geely buying Volvo mean that they'll change the standards that were followed by Volvo for ages?? If they've bought the plants, machinery, workforce and the intelligence, then won't they be able to keep the same quality and safety standards?

Obviously the brand value of Volvo will go down (and Geely will go up) from the current situation, but I don't think they'll bring down a Volvo's body thickness down to a Geely's level. (and so on..)

good thinking and me wish the same would happen. But on contrary, Chinese are very very profit concern and volume concern. Safety and Quality doesn't go in line with that thinking. Whatever said and done on all expertise, R&D, plants what runs the show is that mindset and thinking behind the curtain.

[harshansenadhir]

you have to buy another volvo in 3 months time

only if you manage to save your a$$ from a 60kmph crash

[ae100]

Whatever said and done on all expertise, R&D, plants what runs the show is that mindset and thinking behind the curtain.

Very true..

Hope they'll at least keep the quality at a moderate level.

What I've heard is that Chinese can do any quality. But they usually opt for the low quality cause of the 'pile it high - sell it cheap' strategy. But if needed, they too can do quality stuff it seems.

BTW I have no examples (specially in automobiles) to prove this :-(.

[Ripper]

Very true..

Hope they'll at least keep the quality at a moderate level.

What I've heard is that Chinese can do any quality. But they usually opt for the low quality cause of the 'pile it high - sell it cheap' strategy. But if needed, they too can do quality stuff it seems.

BTW I have no examples (specially in automobiles) to prove this :-(.

yep i kinda agree with you here.

have used a few chinese tools like spanners and socket sets that were of shocking good quality! even some electronic items...

i suppose they do can make good stuff but majority of their business owners rather go for large scale volume and profits at the cost of quality.

maybe the global down turn also helped them by catering to people who were willing to forgo quality as long as affordability was there

[Pericles]

Very true..

Hope they'll at least keep the quality at a moderate level.

What I've heard is that Chinese can do any quality. But they usually opt for the low quality cause of the 'pile it high - sell it cheap' strategy. But if needed, they too can do quality stuff it seems.

BTW I have no examples (specially in automobiles) to prove this :-(.

Of course they can. Like Nike. Basically stuff that companies that aren't based in China make, using China as a manufacturing base. And I'm guessing lots of electronics.

But stuff that carry a Chinese brand name, hard to find examples.

[Killer-B]

only if you manage to save your a$$ from a 60kmph crash

which you can't unless you ride in the boot

[Le Sabre]

Micro Cars also has a deal wih Geely and assembles the Geely MK sedan in SL.

Maybe Micro cars might start assemble Volvos also here.

[MasterDon]

I thought Geely was with Abans

[Killer-B]

Micro Cars also has a deal wih Geely and assembles the Geely MK sedan in SL.

Maybe Micro cars might start assemble Volvos also here.

I thought Abans was the dealer for geely in SL .... saw some advertisements on the papers too!

EDIT : OK Don you were the first

Edited August 3, 2010 by Killer-B

[gpmac]

Surely Micro will look into this, hopefully the Volvo acquisition will improve the quality of future Geely vehicles, they are on the right track the new Micro Geely is great value for money, most probably Geely taking over Volvo will be similar to what happened when ibm sold the thinkpad brand

[fuzzo]

isn't geely done by abans?

[xXx]

Remember having the very same discussion when Tata took over LR and Jag. Has much changed since the acquisition? or is it too early to comment?

I think Geely will run Volvo as a separate entity. Two outcomes i can think of is Geely may start using more Volvo platforms to make their (Geely) cars and they may discontinue Volvo models that are not generating money (like what Ford did). I doubt Volvo will take a beating on the reliability front. As lot of you have agreed that is their strong point. Take that out and Volvo will be just another car brand. That move will be suicidal.

[Watchman]

Remember having the very same discussion when Tata took over LR and Jag. Has much changed since the acquisition? or is it too early to comment?

I think Geely will run Volvo as a separate entity. Two outcomes i can think of is Geely may start using more Volvo platforms to make their (Geely) cars and they may discontinue Volvo models that are not generating money (like what Ford did). I doubt Volvo will take a beating on the reliability front. As lot of you have agreed that is their strong point. Take that out and Volvo will be just another car brand. That move will be suicidal.

I was thinking the same thing (about the Tata take over about LR/Jag).. LandRover and Jaguar didnt become any 'less' of a premium brand and Tata didnt exactly move UP the the ladder either... life goes on as it did..

I too beleive that it'll be more a case of Gelly using or learning a thing or two about safety from volvo. (which in a way thinking now, is a brilliant move)... I mean if they can resolve safety issues and tweaking up the quality a bit, chinese vehicles will indeed be appealing almost everyone considering thier prices.

The only way they could screw Volvo up is if they cut down on funding that goes into Volvo R&D, which proportiantely to chinese makes i'd think is wayy higher in japanese/european brands. Chinese are more into the Ctrl+'C' Ctrl+'V' principle

[dilku]

yeah; I too was thinking of the irony of the safest auto-brand getting into the hands of a bunch known to be the least safe

It is obvious that according to the recent road accidents no matter which country made that vehicles.Nowadays all look like Papadam.So as it is the world trend,do not worry.