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Geely secures Volvo financing: report

Geely secures Volvo financing: report

Published: 27 Nov 2009 08:58 GMT+01:00
Updated: 27 Nov 2009 12:38 GMT+01:00

The prospective buyers of Sweden-based Volvo Cars, Chinese firm Geely, have confirmed that they have secured the necessary financing for the deal, reports Bloomberg News citing a Geely spokesperson.

Geely Holding Group Co. presented a formal $2.5 billion bid for 100 percent of Volvo Cars back in September after weeks of speculation that they were among the interested parties for the troubled Swedish subsidiary of the US carmaker Ford.

Ford confirmed at the end of October that Geely was its choice of buyer for the firm.

Volvo Group sold its car unit to Ford in 1999 for over $6 billion but the relationship seems destined to be short-lived after Ford announced at the end of last year that it was planning to sell the subsidiary.

Concerns over intellectual-property remain an obstacle to completing the takeover deal however as Ford is set to continue supplying components after a sale.

Similar concerns contributed to the break down of a deal by Beijing Automotive Industry Holding Co.'s to buy General Motors Co.’s Opel unit in July, Bloombergs reports.

Volvo Cars made a loss last year of some 13 billion kronor ($1.85 billion), followed by a loss for the fist six months of 2009 of almost 4 billion kronor.

Geely Group is China's largest private automaker with annual sales projected to exceed 200,000 for the current financial period.

TT/Peter Vinthagen Simpson (news@thelocal.se)

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Your comments about this article

11:15 November 27, 2009 by livinginsweden
A week or two ago many were very scared that the Chinese would steal .. Volvo's technology, etc. .. technology which should have made Volvo one of the leading and most successful car manufacturer in the world. ... but did not.

Maybe those same people should stand up and voice their objection again ... or buy Volvo.

Or is the Swedish Trade Office in Beijing frantically talking to chinese car manufacturers and trying to get them to buy Saab and Volvo?

Will Swedish buy Saab and Volvo cars if they are owned by the Chinese? The same way they buy and wear dresses, socks, shirts, pants etc. that are made in China and sold at HM, Ikea, etc.
13:44 November 27, 2009 by rumcajs
@ livinginsweden

Dude, one thing is sox and t-shirts made in china (i believed they were made mostly in Tukey or India but nevermind) that cost not too much, but if you are gonna buy a car for about 200000 + and maybe even get in a dept... you do thing about that.

Also they are 2 different things. H&M and IKEA are the "owners" of the brand and somehow the Chinese, Turkish, Indian or whatever factories have to accomplish "centain quality standards" (high or low) of the Swedish company that pays them to produce the goods.

In Volvo's case, the owner of the company would be also Chinese so we can forget about the H&M and IKEA case.

We can also forget about the Ford-Volvo case cos Ford didn't move the Volvo production to USA and in the Chinese case, as far as I've heard, the do wanna move the production to China, so "Chinese owner+Chinese factory = 100% Chinese car", which is not the same as "Swedish owner+Chinese Factory = Swedish shirt made in China".

Personaly, I wouldn't buy a Chinese car; even if the name is still Volvo or SAAB.
18:13 November 27, 2009 by aaww
@rumcajs

i think you do not need to worry too much about buying a Chinese car, cause even if chinese company owns volvo or saab, they will not take you as a potential customer, they will make a fortune by selling those in China.

on the other hand, i still believe it's stupid if any chinese company are still interested in a company like saab or even volvo, basically because these two brands does not contain too much after being owned by american owner for a number of years.

if i were a chinese car manufacturer, the only reason i am still interested in buying volvo or saab is probably because i am interested to get my company's name worldwide known. just like Geely did. it's a free public promotion.

how many of you have heard Geely before they claim they would interested in Volvo?
19:42 November 27, 2009 by livinginsweden
The trouble is Swedish companies, and many other companies in other western countries ...... were too short sighted ..... they, like their politicians still think the the sun shines out of you know where .... they flock to the US ... whereas many forward looking US companies were flocking to China ..... Ford, GM, Walmart, etc.... IBM sold Thinkpad to Lenova, etc. they were all in China with Chinese partners ... manufacturing in China and selling to the large and growing Chinese consumer market and exporting from China back to their home countries. ...

If Volvo and Saab had Chinese partners instead of US partners a few years ago, they would not be in this position now.... like the old maid desperately looking for a husband...... They would be growing and very profitable.

The problem is everyone bought into the politicians's rhetoric ... and think that China is still the same old communist state of the 1960s or the racist attitude that it is better to be partner with a company with caucasian CEOs rather than chinese CEOs.

If you are in business and capitalism and chasing success and profits .... you sell to people who what to buy cars ... irregardless of whether they are black or white or yellow or they are christians, muslims, etc.....

So the Volvo and Saab fiasco is a very good lesson for Swedish companies ..... the world has changed ....... without China's money ... US would be bankrupt today.

When Obama refused to meet with the Dalai Lama .. it says out loud ..... you respect your banker.

The Dalai Lama should show some self pride ..... he should realize that he is used by and feted by the western governments when it is convenient for them to use him to stick a finger in the eye of China ... as an example of Human Rights abuse.

When reality bites and money speaks .... humble USA throw the Dalai Lama under the bus..

Wake up Sweden, your technologies and expertise can best be commercialized and profits maximized by working with the Chinese ... yes those communists who happen to worship the same god as the rest of us ... $$$$$$$$$$.

ha ha
21:26 November 27, 2009 by VENCHIEF
i work volvo car dealership in los angeles,ca 27 years. i seen change over the years the word Volvo mean Safety. now we have customer will change there volvo

to another brand. the good old`s day are gone.
23:48 November 27, 2009 by karex
@aaww

You're missing something. The problem the Chinese automakers have is lack of service dealership in Europe. That's why they want to buy a European brand - not American (though they perhaps could if they wanted to) but they're not interested in that market - not yet for their cars at least.

The reason why Ford bought Volvo is because they wanted to stick their foot into the European market. Also, they had an aging platform and didn't have the cash to fund a major project. Volvo's platform was brand new - and was used in all of Ford's cars.

The Chinese have made several attempts to get their own automotive products here and failed every time bgecause they can't provide the After Market support...

They also want the expertise. It's hogwash to say that the patents have been stripped. These patents weren't inherited, they were acquired through the expertise of the engineers the Chinese want working for them instead. They won't suddenly go stupid once owned by the Chinese. They are not too worried about the golden eggs that Ford stashed away, they want the chicken that laid them.
05:42 November 28, 2009 by JoeSwede
@living in Sweden

Good point about Obama, China and the Dalai Lama. I guess at some point the powers in the US decided to finance China's growth. Once that was unleashed without any strings attached, the rest is inevitable.

Maybe selling to China is not the worst thing if it extends the Volvo work another ten years or so. If you were twenty years old and living in Sweden, would you want to start off a career in the auto manufacturing industry?

Like in the U.S., is Sweden going to be left with capitalists and plumbers taking care of their houses?
11:59 November 28, 2009 by livinginsweden
@JS

US did not finance China's growth .... China powered the huge profits enjoyed by Walmart, Apple, etc.

You know that the Human Rights issue is pure political rhetoric to be used as and when convenient and to placate the hippies.

Capitalism will do business and sleep with the devil if there is a buck to be made .. be it China or Russia or Egypt or any other human rights abusing oil producing country or dictator in the middle east.

china-phobia and 'racism' clouds the ability of the mind to think logically.

Smart companies like Apple come back from the dead becos they manufacture their ipods and iphones etc in China, and make huge profits becos China gets less than 10% of the retail price of the iPod, etc.... towards the cost of manufacturing. 80% of the retail price are shared between the retailers and Apple .....

Without the low cost of manufacturing in China, many US retailers and companies like Apple would never be so successful. Same with HM, Ikea, etc.

So wake up Sweden ...... your underlying 'racist' attitudes is killing your businesses.....

@karex

You talk as if China is still riding on horse carts.

Visit Shanghai and see the array of cars on the streets ... what technologies are you talking about? China is sending men to space .... in its own spacecraft ... not as passengers on US or Rus spacecrafts.

Japanese, German, US and Korean car companies are falling over themselves to start joint ventures with China.... to share technologies.

Biofuels and seat belts are not the technology that will drive the future of motoring ... ....

.... and by the way ... if and when Volvo or Saab should close down and put all their engineers on the unemployment heap ..... they like many other Swedish engineers and researchers will be packing up their families and buy a one way ticket and move to China and work for their new Chinese car employers....

Wake up my friends! Take off your blinkers!

ha ha
15:01 November 28, 2009 by pollyadm
That is quite hilarious that so many non-swedes showed more worries than swedes themselves. On every issue concerning China or some other third world countries, they just pop up in time and make all efforts to criticize. To put it bluntly, they just don't like those countries. An american journalist once made a spot survey among advocates of dalai lama, then found out that many even don't know where is Tibet, just fool around.

China is far more complex than one could imagine. They are blaming China all aspects but never praise its ability of transforming such a populated massive land from an European plundered remain to todays rapid growing district in such a short 60-year. Now China has power to buy a little company but look how uncomfortable they have expressed.

Well since they don't like it to happen so just put it there, no further explanation needed or discussion. Who cares if they are really holding racialism attitude, but as far as I know, Chinese are quite clever and, at the same time, the most racialists in the world. So it is still unclear who will be standing in a higher position.
21:36 November 28, 2009 by karex
@livinginsweden

Nothing of the kind. Those of us who like the products produced by Volvo and Saab were kind of hoping some quality-oriented buyer came along to SAVE them from their US owners who are high-volume and low-quality oriented and have already done enough damage to the brands. It's disappointing to see these companies go to a buyer who has an even more aggressive approach in the same direction as the US automakers.

China does seem to have a lot of technology, acquired from buying European companies. When was the last time you saw anything invented by the Chinese with worldwide impact after the gunpowder? Or at least in the last century or so?

The big craze of the 80s was "diversifying your products", anyone remember that? Suddenly companies were all over the place producing everything from soft drinks to satellites. Guess what? it was a mess, you can't effectively keep a good grip on such a huge product diversity. Then everyone reversed back to concentrating on their core products.

In recent years, they have started to realize that you might not be able to diversify your products, but perhaps your income. Many companies realized that aside from their final products they have other assets, just as valuable: expertise. Patent everything and you have a nifty and secure income to help tide you over during periods low sales. They are not so exposed to the fickleness of the consumer as before. Ask any novelist who has published a blockbuster. The big thing nowadays is inventing and patenting.

Sure the Chinese have technology, but they're not earning anything from the rest of the world for its use because they didn't invent it, they just bought it.
15:08 November 29, 2009 by livinginsweden
@karex

Hi, heard of the high quality exploding Volvo? that spontaneously catches fire?

Well if you want to pay the Chinese for something they invented ... the world would be paying a lot for the paper, the gun powder, without need to go further. ... the cultural revolution did stop chinese inventions in the last '100' years ... which is a blessing in disguise becos it gave the rest of the world a head start .... and give people like you the luxury to put down China for the time being .... ..... but in the coming decades ... the world will be panicking for a new reason ....... becos the Chinese like the Japanese and Koreans will be among the top 10 in patent registrations.....

So guess who will have the last laugh ...

ha ha
16:31 November 29, 2009 by bjinger
The world is changging fast more than people can imagine.I dare say, 90% of those who have visited China would change their mindset towards the country. I see many of the commentary here are laughable.
19:56 November 29, 2009 by ingvar
@livinginsweden, bjinger

I don't understand what you guys are still doing in Sweden. Rush back! To your prosperous homeland.
11:10 November 30, 2009 by eliteresourceagent
Obviously, the Chinese living in Sweden are often thoes financially and socially disadvantageous. Most of them came here for the free study and then tried everything to stay, more or less like all the thrid world country people here in Sweden. Simply because they cant afford the expensive tuition in England or US sometimes not even back in China. There are places in China charge more than 100000 these days. I can fully understand why the blessed Chinese are praising the progress in China. But when it comes to the Chinese who live in Sweden, I dont see any point...
15:56 November 30, 2009 by latent
If all the chinese now living in Sweden go back china, it will be a more serious loss for Sweden than just a Volvo or Saab. This part of Chinese are just lazy, they are enjoying now developed sweden by some ways, and they will move out soon when China is become developed.
10:24 December 1, 2009 by livinginsweden
@ingvar

I am a human being .... who is living in Sweden ... I dont judge people by their skin colour or ancestry ... i judge them by their words .... dumber or dumberer ...

I cannot rush back anywhere becos I am Swedish .... see ... just becos someone has a critical, unbiased, non-racist and open view on a subject matter ... you draw the (wrong) assumption that I am a foreigner .........

I love Sweden as much as I love the world .... and I hope Sweden wake up to the new world reality.....

By the way have you read that Telenor has just awarded a major network upgrade contract to Huawei in preference over Nokia or Ericsson. Why? you might ask. Is it cheap labor or better technology?

As to those comments about chinese and foreign students in Sweden..... .. maybe every foreign student should go home to their homeland for every Swedish worker working overseas coming home ... a sort of 'prisoner exchange' ....

ha ha
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