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China's Geely to buy Volvo Cars: report

David Landes · 18 Jun 2009, 10:21

Published: 18 Jun 2009 10:21 GMT+02:00

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Citing a report published on Wednesday in the National Business Daily, the Shanghai Daily newspaper reported on Thursday that Geely Automotive Holdings plans to buy Volvo and produce a new model of the traditional Swedish brand in China’s Guangzhou Province.

As a part of the deal, Geely plans to start production of the new Volvo XC90 in Dongguan City in what is seen as a major step forward in the Chinese company’s bid to expand into the global auto market.

Terms of the deal were not disclosed, but Jia Xinguang, an analyst with the Chinese National Automotive Industry Consulting and Development Corporation reckons that Volvo would not be sold for less than $3 billion, the Shanghai Daily reports.

Ford purchased Volvo Cars in 1999 for around $6.5 billion.

Geely representatives were not available for comment, according to the Shanghai Daily.

A Volvo spokesperson told the TT news agency on Thursday that the company had no knowledge of any agreement to sell the Swedish automaker to Geely.

“Ford is in charge of the sale. We don’t know anything here,” said Volvo’s Maria Bohlin.

Greely Deputy CEO Daniel Dai also denied the report, telling Sveriges Radio (SR) that his company is too small to buy Volvo Cars.

According to Dai, the information about the alleged deal is mere speculation.

“We’ve already said three times previously that we aren’t involved in this project,” he told SR.

John Gardiner, a spokesperson for Ford Europe’s based in Germany also dismissed the rumours.

Story continues below…

“This is just speculation from the market. We neither confirm nor deny these speculations,” he told the TT news agency.

“We continue to discuss Volvo’s future with a number of interested parties.”

However Gardiner refused to name any potential buyers or say how many had a continued interested in purchasing Volvo.

David Landes (david.landes@thelocal.se)

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Your comments about this article

10:48 June 18, 2009 by jack sprat
Well its all happening in the auto. industry.

Who is up for a Chinese built Volvo.
10:50 June 18, 2009 by sherkovic
so...made in china volvo from now on.......lollll
11:15 June 18, 2009 by Dazzler
So much for the safety standards!
11:22 June 18, 2009 by hpunlimited
Byebye jobs in Europe and byebye quality. Why have an ashtray when you can throw out the ciggarette out the window, why leatherseats when rubber works. Chairman Mao for new company logo.
11:31 June 18, 2009 by Nemesis
This si not good news.

It si unfortunate that some Sweden people in the goverment did not grow a backbone and get swedish investers to purchase volvo and keep it in Sweden.

There goes a large amount of Sweden's manufacturing base.

This is bad for all of europe.
11:42 June 18, 2009 by gjäntår
Bad news. Only european people know how to make european standard cars. Just think about what happened to Lamborghini, when the americans bought it. Things went really bad. After a while Audi bought it and everything was better than before again. So if the chinese buy Volvo cars....be prepared for quality decadence. I hope the management finds better investors...
11:48 June 18, 2009 by jack sprat
They will probably transform Volvos from motorway tractors to tin cans on wheels.

Big shame.
12:05 June 18, 2009 by GITM
"according to Chinese media reports"

TBH, i wouldn't trust a Chinese media report if i was paid to.

And AFAIK there isn't a "new" XC90.
12:17 June 18, 2009 by Mzungu


No such reports in Swedish media that have searched! It's all about a report published on Wednesday in the National Business Daily.
12:22 June 18, 2009 by GITM
And its just been denied by Volvo and Ford. (Internal statement just popped up on the homepage)

Deary me, the local need to check their sources more thoroughly, first the Air France crash photos, now this. Next thing we know they'll be quoting The Dandy and Marvel Comics as reliable news sources, or the Daily Mail.

Just need Kindman to start writing articles about social and religious tolerance, Liveman on the finance and immigration section and the rest of the nutjobs to choose their reporting niches now...
12:22 June 18, 2009 by High Priestess Kang - Slut
Egad...for the sake of Volvo, I should hope this isn't happening. Volvos feel unusually flimsy as it is. I cannot imagine what will happen to the quality standards if they are produced on a line in China alongside some melamine formula and lead-based paint kiddie toys.

I think someone mentioned bringing SAAB closer to Asia yesterday in the Koenigsegg thread. To that I say, "why?" Why would anyone subject proprietary material to the masterminds of reverse-engineering?
12:24 June 18, 2009 by Kind Man
shameful news. Sweden is famous for its Volvo and Blondies, I am glad we still have the blondies.

It it very big shame for government that they dont buy Volvo or Saab. Volvo and Saab became like a new virgin woe in the market where men are barginning after. and so shame for government that they cant keep their only famous product. I want that Sweden completely own this two cars!
12:38 June 18, 2009 by justanotherexpat

1. "Only european people know how to make european standard cars." - err....one word...Japan. Oh sorry, by "European" you meant "inferior to the Japanese cars", right?

2. So many clichés about quality - no wonder Asians hate us in Europe. Get a grip. Europe has become lazy in the last decades and it needs to watch out - India and China are overtaking us. Rapidly.

4. "Sweden is famous for its Volvo and Blondies, I am glad we still have the blondies." - firstly, Vovlo is owned by Ford anyway. Secondly, what do you get if you turn 5 Swedish blondes upside down? On average three brunettes......or four baldies.......either way, it makes the point - stereotypes are often inaccurate.

5. Report just been denied by both Volvo and Ford? Good! Fewer racial sterotypical, knee-jerk reactions on The Local. Hurrah!

Trevlig midsommar. Try not to kill the små grådorna in your american cars......
12:44 June 18, 2009 by Hong Kong Phooey
"Ford is in charge of the sale. We don't know anything here," said Volvo's Maria Bohlin.

- I hope for your sake that this is a mis-quote Maria, otherwise with this kind of attitude, it is no wonder that Volvo is no longer an independant entity.
13:17 June 18, 2009 by skane refugee
Often during late stage company sale negotiations it's advantageous for the seller (Ford in this case) to put closing pressure on the favoured potential buyers by leaking reports of other buyers being about to sign.

Maybe Geely are being used as pawns in a high stakes negotiating game with another (as yet unannounced) buyer?!?

Maybe this will force a close to the deal (finally!) with a better long term backer ... the uncertainty must be painful for Volvo workers, unions, Gothenburg regional politicians etc
14:30 June 18, 2009 by millionmileman
At first the reaction seams negative, but it is possible to have it both ways, meaning, you have the great Volvo name penetrating China, making a more famous name go worldwide. That way you gain more Volvo loyalists, to keep the marque growing.

Just like Buick is so popular in China, but stays there and BMW's are prevalent in South Africa and China. A few years ago, I personally suggested that Saab look to India and Chine to expand the brand, especially to make the brand more competitive in Europe and the USA. Also the Chinese will lead the push towards electric car technology, which will be especially good for Volvo.

Peter Gilbert
14:37 June 18, 2009 by High Priestess Kang - Slut
I think the reaction is negative for a well-founded, well-established reason. Volvo is known for its focus on superior safety. The same cannot be said for certain products from China (I'm being very conservative here with my choice of words).

Let's look at the consumer base. How many people buy Volvos because they are accessible and affordable? How many people buy Volvos because of the quality and safety features (in other words - willing to invest a considerable amount of cabbage for a greater return)?

Maybe Chinese manufacturers are attempting to broaden their horizons, but I highly doubt it given the amount of crap that flows into my inbox from the CPSC on a daily basis.
14:55 June 18, 2009 by sherkovic
Great move. I think now Volvo will be developed as a global brand..affordable for the whole world...Hats off to Chinese brilliance for cracking such a deal.

Dont worry about the jobs..It eventually passes on to the nations who are good in doing it...Remember, The World Trade Model....Now why are we afraid when China is taking advantage of the lower world trade barriers.
15:09 June 18, 2009 by jenny83
Agree with sherkovic. It is not the fault of Chinese, as you can see most of the products, even Volves produced in recent years have lower quality than before. It is the trend of the world, we are seeking for products in lower prices. Think about the consumer electronics.

BRIC is emerging. If you go to China, people there are working hard and changing fast. In big cities, the middle class can afford even a new BMW.
15:33 June 18, 2009 by High Priestess Kang - Slut
I think there are three different discussions going on in this thread:

1) Quality, accessibility and affordability of Volvos (past, present and future)

2) Consumer expectations

3) Typical Chinese output

If Volvo is sold to Chinese manufacturers, it is only natural for the average consumer to wonder what sort of quality metrics will be adhered to. It's not the consumer's fault that Chinese goods are considered substandard in certain markets. I'm sorry if you find the obvious and proven offensive, but that's the sad fact of the matter. Between piss poor production standards and quality standards which are beyond inconsistent, anyone who falls into the category of high consumer expectation has good cause for concern.

FWIW - I cannot, even if they were given away free, get any of my hospitals to transition to a certain patient slipper, manufactured in China, because of quality and safety issues. These facilities would sooner pay double the price than risk a patient fall due to shoddy workmanship, raw materials, etc...
19:11 June 18, 2009 by mombassa
I.D.I.O.T. Swedes.

Expat, how are European cars "inferior" to Japanese cars?

Japan is great because of the MASSIVE transfer of western technology in the past, technology that the Japanese did not have to develop themselves.

I have a classic Mercedes from which the engine was copied to use in the famous Datsuns, very typical.

Look how fast Korean manufacturers rose; they were still building Korean branded cars copied from licensed European models 20 years after they came out in Europe.

Early in the 20 century the Japanese were even buying complete buildings in Europe and shipping by barge to Japan.

Same thing with China, they will buy Volvo, take and master the technology, put it into their own cars and sell it back to idiot Europeans and Americans for half price.
19:37 June 18, 2009 by jack sprat
It may be a bit early for Chinese technology and quality,especially quality control, to be on a par with Japan.

However the time may not be too far away, in which case it will probably signal the end of the line for all mass produced European and American cars.
19:50 June 18, 2009 by Gustav- Fælbönnran
I am all in favour of selling non-competitive businesses to the Chinese.

Let's be leaders in the Next Big Thing, and not get hung up on the past.
20:02 June 18, 2009 by skane refugee
Agreed ... always struck me as a bit bizarre that western europeans and north americans took so much pride in having chunks of their workforce metalbashing and screwing together components to make cars ...

The returns on capital among automakers, even in good years, are generally mid-single figure percentages ... hardly worth the effort

The real money in automotive is made by patentholders of key components used by mass market and luxury volume produced vehicles ... doesn't employ so many people but is the big wealth/profit generator ...

When we analysed this at business school ... Italy and the UK emerged as centres of European excellence for auto component innovation (largely as a result of Formula 1 racing research and the large number of specialist sports and supercar manufacturers) ... instead of the intuitive expected German/French domination given their much larger auto manufacturing base!

Let the 3rd world screw the components together ... let the west concentrate on design, marketing and component innovation (particularly green tech) and re-absorb their workforces in more interesting/value-added sectors of their economies
20:04 June 18, 2009 by skane refugee
Absolutely agree! :-)
20:48 June 18, 2009 by mombassa
skane refugee, good points,
21:03 June 18, 2009 by Coalbanks
Please! We all know that we read The Local for the SPOTLIGHT & the incessant bickering only, right?
21:37 June 18, 2009 by jack sprat
As you say Mombassa,the far East has made good use of Western technology.

There is quite a lot to be said for it.

The Koreans in particular are able to make cars with a very high degree of reliability,possibly the most important factor,by using very well proven working parts,hence they are able to offer 5,7,or even 10 year guarantees,something not to be sniffed at.

Its ok to be at the cutting edge of technology as in Germany's case.

However even after much testing this does not always guarantee reliability.

Quite a few faults only show up after a few million cars have come of the production line.

I have had problems myself and driving the full length of Europe quite often I have to say that I see more German cars stranded than any others, whilst it is very rare to see a car from the Far East stuck on the roadside.

Taking into account the exceptionally high cost of spares and repairs, in addition to possible inconvenience with the German and also some recent Swedish models, I buy from the East every time now.

Hardly worth paying twice the price just to get away from the lights a fraction quicker, or whatever the latest refinement might be, and losing out big time on reliability, maintenance and overall cost.
22:32 June 18, 2009 by Greg in Canada
Maybe the Chinese might start making the P1800 again, my favorite Volvo of all time.:-)

Seriously, I hope it's not true, but at least Saab is remaining Swedish.
00:12 June 19, 2009 by boston20
A COMMUNIST country buying Volvo, but BMW buys their parts from the Commies. Better RED than dead.
00:53 June 19, 2009 by jack sprat
""but at least Saab is remaining Swedish""

Maybe,Maybe Not.

Three likely scenarios.

4 or 5 years on....

1.They struggle under the massive burden of debt,cant pay their way and go under, and as SR suggested become simply a supplier of spares,...the Saab logo is sold cheaply to some other company,in the hope it lives on.

2.They restructure on a much reduced scale and have some success with one or two prestige models.By this time the recession is over and its boom time again,however the profit margins are wafer thin and they are still in debt.

They are eyed up and then swallowed up by one of the big Japanese giants or a newly emerged Chinese or Indian giant.

3.By some miracle they have managed to pay off most of their massive debt and the now smaller restructured company is turning out new popular high quality prestige models that have exceeded all expectations and will remain Swedish or at least Scandinavian.

Place your bets.
02:30 June 19, 2009 by Coalbanks
I was hoping for Vlad Putin to make an offer Sweden couldn't refuse. Paid in vodka & guarantees of access to Siberian oil/gas.
04:38 June 19, 2009 by lingonberrie
Remember what the principal people have said, this is not a done deal.

Volvo is still for sale, and I would prefer that someone in Sweden do as the man did who bought Saab. Both of the autos are Swedish products and both of them belong in Sweden.
12:53 June 19, 2009 by spy
Nothing official but this is how the Saab situation played out:

A leak; followed by no comments; and then an annoucement a short while later.

The only difference so far is that Volvo PR team are saying some wacky things: "Ford is in charge of the sale. We don't know anything here," said Volvo's Maria Bohlin - and I bet she did't get a pat on the back for that quote.
10:08 June 20, 2009 by sebseb
Before the end of the summer, the US$ will have as much value as an empty bottle of imported beer in Sweden.

China is cuttently getting rid of US$ reserve, like Russia and Iran alike.


So, I totally back China to buy Volvo, American assets outside the USA. This is the smart thing to do: buy buy buy american assets outside the USA before it collapse.

Life is beautiful!
10:51 June 20, 2009 by Jay02
A sticker on TATA Nano in India:

My other car is a Jaguar .
18:35 June 20, 2009 by spy
The Chinese make terrible cars (type in 'chinese crash test' to any video sharing site!) and they have no global brands which is why they steal mercilessly (the Geely 'Rolls Royce' for example).

Will an owner like Geely really care about what is good for Volvo, its employees and Sweden?

I very much doubt it - I think they would be more interested in getting hold of technology and moving production to China. . . Chinese ownership will destroy a good brand!
21:49 June 20, 2009 by jack sprat
What the Chinese produce now and what they may produce in a few years time are most likely totally different products.

With access to Western markets, Western technical guidance with regard to the quality of their product and highly competitive prices they could virtually wipe out the Western Auto industry in a short space of time.

Remember the first Japanese rust buckets on wheels that came into Europe.

It didnt take them too long to get their act together either.
22:56 June 20, 2009 by Kooritze
Totally agreed Jack Sprat. While some in this thread are ridiculing the chinese...........the joke will surley be on us in the very near future.

Every dog had it,s day as the saying goes. While a lot of complacent europeans think it is still their day.......a huge, hungry for development Chinese nation is growing out there that has potential far exceeding what Japan achieved.

We Europeans are good at stuff, but it does not mean this trait belongs purely to our nations. It wont take long either.

The US will also be knocked a few notches down very very soon.
15:21 June 21, 2009 by spy
I am not ridiculing the chinese I am stating a fact.

They do not have the technical know-how nor any global brands to speak of. They have been making cars for a while but they are substandard in comparision to western vehicles and far below European standards.

What they have got is financial backing from a communist government and a capacity to manufacture cheaply. They can do this because they do not pay western wages, benefits, or have the same heath and safety costs.
19:36 June 21, 2009 by russellouten-coe
Although a SAAB devotee I would have considered VOLVO as my second choice. If the Chinese take over - forget it!! They will rip out its heart and stick it on a photocopier!
01:40 June 22, 2009 by grace89
1.where there's smoke,there's fire. There is no any news about other company to buy VolvoCars.

2. Chinese compay will buy it even you all are not satisfied.
07:00 June 22, 2009 by skane refugee
According to Businessweek, Geely are primarily interested in Volvos European and North American dealer network. Together with the brand of course.

Businessweeks take is that Swedish Volvo executives made critical errors in recent years fighting Ford management on diversifying production away from Sweden as a currency hedge and for cost control.

They add that Volvos 'safety' premium has been eroded by improved safety standards in competing brands, and that styling has lagged competitors ... at the price charged in the marketplace by Volvo ... they simply couldn't sell enough vehicles to cost-cover

Blind economic nationalism rarely sits side by side with robust profitability ... if Volvo weren't chronically loss making the Swedish management could pick and choose from a wide range of potential buyers ... even in this economic climate ... instead of being out with a begging bowl ...

If and when a deal is done, Volvo management could and should be facing a lot of awkward questions
04:31 June 24, 2009 by volvoman9
Unfortunately it is in all the involved parties interest to stay mum on these issues. In reality the rumors turn out to be true in these matters most of the time. I am truly disappointed that Sweden or some other European brand has not stepped up to save a truly great marque. Such a shame to allow the genius that is Volvo fade into shoddy obscurity. As a long time owner of the "Swedish bricks" I am sorely gutted.
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