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Ford picks China's Geely to bid for Volvo Cars

TT/AFP/The Local · 28 Oct 2009, 22:48

Published: 28 Oct 2009 11:43 GMT+01:00
Updated: 28 Oct 2009 22:48 GMT+01:00

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According to a statement from Ford, Geely is the company’s "preferred bidder" in the bidding process.

Ford also said negotiations are continuing and no final decision has been made. Nor is there any time limit for concluding negotiations.

"Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand," he said, adding "much work ... needs to be completed" and there was "no specific timeline" for concluding talks.

"Ford's objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties...any prospective sale would have to ensure that Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise."

Upon an eventual sale, Ford doesn’t plan on retaining any ownership stake in Volvo Cars, according to the US automaker.

Citing sources close to the negotiations between Geely and Ford, the Bloomberg news agency reports that Geely, China's largest independent automaker, is prepared to pay up to $2 billion for the unit, which is less than a third of what Ford paid when it purchased Volvo ten years ago.

John Fleming, chairman of Ford's European operations, including Volvo, said that "any sale also would need to take into account the significant connections between Ford and Volvo in terms of continuing component supply, engineering and manufacturing."

The Hangzhou-based Geely said that under its bid, supported by Chinese banks, Volvo's existing production and research and development facilities, union agreements and dealer networks would be maintained.

"Should a final agreement be reached, Geely will safeguard and strengthen Volvo's world-renowned brand heritage, ensuring its continued leadership as a premium car company with a global reputation for safety and environmental technologies," said Li Shufu, Geely chairman, in a separate statement.

"This is an important strategic step for Geely, signaling our commitment to Volvo's presence in more than 100 markets around the world and building on our strengths in the Chinese car industry."

Stephen Odell, CEO of Volvo Cars, welcomed Ford's announcement as "a positive step forward" for the loss-making carmaker.

"At Volvo, we are continuing to keep our attention firmly fixed on engineering and building great Volvo cars, to reduce our cost base and to return the business to sustainable profitability at the earliest possible opportunity," he said in a statement.

"Ford has acted as a responsible owner. Under these hard economic times we have gone through, Ford has supported us in many ways," he said later on Wednesday while speaking at a news conference at the company's headquarters in Gothenburg, where the firm was founded in 1927.

Story continues below…

Swedish Enterprise and Energy Minister Maud Olofsson said the news was "good, because the uncertainty has not been good for Volvo."

"And we have told Geely and everyone else that we have been in talks with

that we want production to stay in Sweden," she added.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

14:24 October 28, 2009 by V70
Et Tu Volvo..the beginning of the end...
16:59 October 28, 2009 by bjinger
and way to the new..
17:27 October 28, 2009 by maxbrando
How do you say Geely in Swedish? "Hey honey, let's go buy a gGeely". And you drive to a fish market for one.
17:31 October 28, 2009 by Keith #5083
Since it would appear, in global economic terms, that China is on the up and the USA on the down, maybe a chinese owner could be of great benefit. Not least innovative and cost-effective production and marketing.

So much that we buy now is sourced in China, regardless of the 'brand label'. Equally, the Chinese 'middle-class' are developing a taste for cars with 'class', witness Rolls Royce concerns over Geely's GE model.

If Volvo must be sold then an entry into the surging Chinese market, through Chinese ownership, may well be a positive thing.
18:53 October 28, 2009 by mibrooks27
You can basically write those jobs at Volvo off. They will be moved to China. The only thing that will remain of Volvo, will be the name. This sad, shameless story of greed, has been repeated again and again, in the U.S. It's a scam, a fraud, run by America's "multinational" corporations and about what you can expect, and deserve, if you are so stupid as to do business with them. The 150,000 or so jobs that Sweden will surely loose over this will have been well worth it if we learn that one lesson.
19:42 October 28, 2009 by volvoman9
I agree with the former comments by mibrooks27 as to the shameful greed demonstrated by corporate America. America is bent on showing the world the ugly face of capitalism with no restraints. This is a subject unto itself. However to say that the loss of over four billion dollars is part of a scheme to cripple Sweden is a stretch. Even mighty Ford must be hurting from this cut. The mistake was made when Volvo was sold to the Americans in the first place. There is an old adage that to turn gold into tin one must send it to Detroit. The American car industry has long been a sham and is driven by nothing but profit. This is why it has collapsed. No foresight and no quality. Chrysler almost ruined Benz. Corporate America feeds on on it's customers and this will eventually lead to total ruin to the benefit of a very few. The really sad story here is that no Swedish investors are willing to save this outstanding brand from the mediocrity to which it is almost certainly doomed.
19:52 October 28, 2009 by spy
When for says:

"Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand."

They mean:

"We have been trying to sell Volvo for simply ages but have not had any luck and so we are forced to sell to these corporate savages - we know this is bad for Volvo but we have our own problems to face."
20:55 October 28, 2009 by V70
1. Swedish Pride - Volvo Cars employs 12,000 or so workers in Sweden and the government there isn't going to pick up their wages when the Chinese take over and move Volco Cars elsewhere.

2. The Chinese are smart enough to know that they will be buying a dead brand if they in fact buy it.

3. Ford will not risk giving their technology to the Chinese. They will agree to protect it, then go back on their word. They have no respect for international/contractual law.

4. Volvo AB will not allow the Chinese access to the name, without the name, Volvo Cars is worthless.This Quote Sums it up

Ford wants a certain amount of money for the brand and this is a way to get that amount from a truly trusted party. I can't help but notice that there are quite a few execs back in position at Volvo Cars, that had originally been put there by Volvo AB, even as far as putting Peter Horbury back in place. Volvo Cars has recently restarted work on projects that were initially shelved by Ford. This is going to get interesting boys, but it won't be the Chinese.
22:31 October 28, 2009 by shiraz
Oh please why cant the chinese come up with their own brand instead of F_ING everyone else's brand.

I really really used to like think pads but since Lenovo took over thinkpad I cannot stand their new versions! God someone export a few product design engineers over to them. Why are the Kings of product design (swedes) abandoning volvo? Please God make Sweden's car companies healthy again!
23:06 October 28, 2009 by Keith #5083
Of course, I suppose there is nothing to stop Volvo going into 'public ownership' - that is to say raising capital from the patriotic Swedes who wish to preserve Swedish integrity in the brand name. This is not to say that tax-payers fund the bill, but I see no good reason why ordinary Swedes could not be offered some sort of 'preferential shares' that could, for example, allow them to loan/invest in Volvo and Volvo have a source of 'interest free' capital (you loan the money in the form of some sort of share without requiring interest on your capital or dividends on the share).

I believe it's called 'putting your money where your mouth is'. Incidentally, I wonder how many who make 'negative comments' actually own/drive a Volvo themselves?
23:32 October 28, 2009 by falcon
First Saab goes to inexperience and very low capital. Now Volvo does the same. Goodbye, Sweden. Sad.

Folks, wake up before it is too late.
02:23 October 29, 2009 by 2394040
Supposedly Lenin stated that the capitalists would sell the Communists the rope that would be used to hang the capitalists. Looks like Lenin was right.

Who would have thought even two years ago that Volvo might be produced in a country that has the largest slave-labor population in the world?

And the New World Order continues to lead the world to its destiny.

And the forces of darkness rub their hands with glee.
09:21 October 29, 2009 by bjinger
Who's to Blaim.

It's good news for Volvo to contimne its glorious path in the car industry.It's a awakening signal that people are tending to politicalize the sale of Volvo. Don't forget the history of develoipment of Volvo that started in 1927 with a shabby workshop and grew a giant through the years, but in the competitive world Volvo facing the great management problms that led to changehand to Ford.And the problems remained unsolved now. Just think, who's to blaim. It's a shame to blaim those who come to help.
13:31 October 29, 2009 by Ozpot
This is what should happen car makers should be bought out not bailed out.
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