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Volvo sold to China's Geely

AFP/The Local · 28 Mar 2010, 14:56

Published: 28 Mar 2010 14:56 GMT+02:00

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"I can confirm that a final agreement on the sale of Volvo to Geely was signed at 2:40 pm," Volvo Cars spokesman Per-Åke Fröberg told AFP ahead of a news conference due around 3.30pm.

The deal was signed at Volvo headquarters in Gothenburg by Ford's financial director Lewis Booth and Geely's president Li Shufu, Froeberg said.

Booth confirmed that the sale was for $1.8 billion, less than a third of the $6.4 billion Ford paid for Volvo Cars in 1999.

Volvo has 22,000 employees worldwide, including 16,000 in Sweden.

Ford Motor Company announced in December that it had agreed on the main terms of the sale of its loss-making Swedish subsidiary Volvo Cars to Geely, one of China's largest private automakers.

The deal will bring to an end Ford's decade-long association with the premium Swedish brand, known for its sturdy, family-friendly cars.

Volvo unions had earlier voiced opposition to the deal on grounds that it was vague on expansion plans and possible layoffs.

Three Volvo unions this week pressed for details "on the capital that will finance Volvo's daily activities, investment on future projects and the production target of 600,000 vehicles by 2015."

But on Saturday they pronounced themselves satisfied.

Ford had said it anticipated "a definitive sale agreement will be signed in the first quarter of 2010, subject to appropriate regulatory approvals".

Geely reportedly secured the financing needed for the purchase earlier this month, which the Financial Times valued at about $1.8 billion.

The newspaper said more than a billion would be loaned by the European Investment Bank and the Swedish and Belgian governments.

Story continues below…

The Swedish media had questioned the ability of Geely, a relatively young player, to finance the takeover.

The deal was a "leap in the dark," said the Dagens Nyheter newspaper, the day after the accord was announced.

But Svenska Dagbladet said on Saturday that Geely's chairman had given guarantees that all research and development activities would remain in Sweden and that production would first be assured by plants in Sweden.

Geely chairman Li Shufu has previously told Chinese news agency Xinhua that nothing will change for Volvo, except the boss turns him.

"Volvo and Geely will be two independently-managed brands," he said.

AFP/The Local (news@thelocal.se)

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Your comments about this article

19:11 March 28, 2010 by aven
Good start? or bad end?
20:03 March 28, 2010 by spy
Bad end.

Volvo R.I.P.
20:23 March 28, 2010 by americanska
this should be interesting.
20:40 March 28, 2010 by livinginsweden
@ spy

the chance of china screwing up volvo is less than american screwing up Gm, chrysler, lehman useless bros, fanny and mannie, the world, etc..... etc, etc..

so on that averages, volvo is in better hands....

ha ha
21:28 March 28, 2010 by americanska
livinginsweden - your envy of america is pretty funny.

ha ha
22:25 March 28, 2010 by zhqwang
I will buy Volvo car if I come back China in 2010.9. I think that they can manage well Volvo. I wish that Sweden people love their brand like the past. Market of China is very large, Do you know the sum of the sale of German company in China. I think that China will is the largest market in the world. of course Volvo has the large chance to realize their dream. I think that Volvo car would be kept in the Europe!
22:25 March 28, 2010 by Nemesis
Actually there is a good chance that Geely will make your Volvo a sucess.

Geely is far form backward. Gelly might in the future show people here in the west a thing or two.

The days of China being a backward country have ended.

I suggest you goto Shanghai and learn a thing about China before commenting.
22:49 March 28, 2010 by skatsouf
definitely not an end; an interesting restart

the biggest challenge will be to reserve the brand's reputation given the biased reluctance of our western world against China emerging as the new powerhouse
23:16 March 28, 2010 by umu_dragon
Nice,geely mentioned that Volvo remain the research and design in Sweden. Also Volvo as a "independently-managed brands".

My friends was laid out since Volvo in trouble and now they are called back. I am glad of that!

Best wishes to Volvo and Geely, conquer the chinese higher quality car market. Build long term relationship and be loyal with each other!
00:28 March 29, 2010 by Venturisection
For a company like Ford to drop a brand like Volvo I found myself asking "why?"

Ford has been doing particularly well their market share has increased hugely during the recession, their cash position is good.

The problem simply is Volvo lost loads of money LOADS AND LOADS.

If Geely manage to actually save money at Volvo where they resisted nearly all the efforts of Ford to save money at every turn doing their own thing then I can see things going forward. Also if they can sell lots of Volvos in China otherwise Geely will take as much Technology as possible from Volvo and we'll see what happens otherwise.

It's possible that it will just Dissappear, as per what happened with MG Rover, China is a shrewd business partner and not very free maybe thats what they need a good kick up the arse, can't say partnering with russians and crazy dutch is much better either.

Who is going to suffer the most on bearing the weight of the ultra loss making Swedish Car Makers?
00:48 March 29, 2010 by laura ka baal
Imagine must be going through the heart of coomon swedes working under chinese.
01:07 March 29, 2010 by Thebinary1
Loyatly, trust, and guarantees mean jack all when money and profits are at stake. That is the first and last rule of commerce.

Here is how things will play out:

1. Short-term time period, 3 to 5 years - Volvo ramps up production and meets targeted expectations which are not that ambitious. The only way to show that the partnership is a success is to lower Volvo's bar and making it easier to achieve. Everybody will be rejoicing. During this time, Volvo's R&D in Sweden will not get a funding increase. Simultaneously Geely's cars in China will undergo a miraculous transformation and they will showcase Chinese automotive engineering ingenuity. This will be achieved via backdoor transfer of technology from Volvo to Geely which will always be denied publicly and cast as a rumor. Both Volvo and Geely are selling cars as usual at this point although Geely gets the edge in annual sale increases.

2. Long-term time period, 10 to 15 years - Geely cars start to outsell Volvo cars because of an executive mandate that is publicly denied for Geely to sell a vastly larger number of cars compared to Volvo, hence raising questions on Geely's ownership of Volvo. Volvo is calssified as a "has-been" by this point because its sales are not near as enough for Volvo to be self-sustaining. Volvo gets plaugued with comparable issues to what SAAB just suffered under GM this 2009/2010 period. Volvo gets put into a position of being stripped apart and sold in pieces. Geely buys Volvo's R&D unit in Sweden, but not the manufacturing unit in Sweden.

And there we have it. Volvo - a has been. The following principles dictate why the above outcome is most likely to happen:

1. That is how new companies selling old ideas (a car is an old idea) establish themselves and compete effectively against current giants.

2. That is how a country keen to establish an international household brand-name, keen to put itself on par or even supercede the present rivals (the East is always seen as a rival of the West and not a partner of the West, and vice-versa) gets to achieve its objective.

3. This is the law of natural selection and the impact of raw numbers (of people) on a society. Asia has 4 billion people, Africa has 1 billion, and South America has 750 million. The remaining 1 billion is called "the West". Ericsson is today a "has been", and Nokia's days are numbered .... just like how IBM's days were, and as of late GM and Ford as well.
01:09 March 29, 2010 by Bowen
I am glad to see there is lots of positive comments,I believe that Volvo will get further development under the authority of Geely holding,meanwhile the core value of Volvo " safety,family-friendly,high-quality,environmental-care" must be maintained.

China is already the largest Automotive market in the world,I am looking so much forward to Geely-Volvo's success in China.
01:28 March 29, 2010 by Thebinary1
Forgot to add Motorola as well to the list of "has beens", but I guess you get the idea.

But now here's the clincher for every Volvo car owner in Sweden and abroad:

1. Geely is a (Chinese) *state* owned company

2. China's military expenditure grows with double digits year upon year.

3. China's military/communist regime is currently involved in a few (okay here's the fireworks) internationally frowned upon activities. For the sake of a real example, let's say it bluntly and explicitly: China's military/communist regime is currently involved in the cultural genocide of the native Tibetians. The Tibetan language is now a minority in its own region.

In conclusion: Every Volvo owner is as of today actively instrumental in propogating cultural genocide of the native Tibetians. (Congratulations?)

So here is the most interesting question: Would you, as the owner of a Volvo, choose to ignorantly propogate cultural genocide of the native Tibetians - or knowingly deny some 16,000 Swedes a job in a car company in the current economic climate?
02:09 March 29, 2010 by Eagle63
I'm glad I kept driving a Saab....

[9-5 Griffin V6t]
02:30 March 29, 2010 by Nilspet
I think Volvo will do better at least in the first few years. After that is all about innovation. If Volvo keeps coming up with new innovations...it will be able to compete and eventually make its value higher. Past glories are not a selling points in auto industry.
03:16 March 29, 2010 by texasgubbar
"China's military/communist regime is currently involved in the cultural genocide of the native Tibetians. The Tibetan language is now a minority in its own region."

Boo hoo probably more people in China speak Tibetian than people who speak Navajo in the US. Just because it took place in the 19th century doesnt mean it wasnt cultural genocide...

"China's military expenditure grows with double digits year upon year."

The US military budget for 2010 is $663.8 billion, Chinas was $70 billion in 2008. The US borders Mexico and Canada 2 scary states. China has a huge border with Russia, as well as many of the not so safe 'stan' countries. So who is spending so much on military????

The red white and blue goggles are blinding you...
03:29 March 29, 2010 by Davey-jo
@ Nemesis

"The days of China being a backward country have ended."

I really do not recall the days when China was ever a backward country. It has led the West in so many ways that I won't give you a history lesson.

This recent event is just a spasm of global capitalism and need not interest historians too much. Look out for mass reductions in Swedish manufacture and a switch to more Oriental production. Volvo will lose it's reputation as a quality manufacturer but no-body will give a damn. Perhaps they will turn off the headlights in daytime ;}
08:27 March 29, 2010 by livinginsweden

I cannot have enough of amercana.... i wear cowboy hats, cowboy hat, drive big american cars, love big american girls, i sucks in geography, i eat taco and chips and nothing else, i love obama, worship him in fact, i believe in change, i believe in universal health care, i worship money, i borrow from china, did i say i love obama and change ? i love dolly parton, kenny rogers, i love bud... is that american?, i can go on and on... love bush also, the evengelica churchs, i go to every weekend, love brad and angelica, .. lvoe you too!!!

ha ha ha
08:27 March 29, 2010 by chechesenedica
is ERICSSON the next "chinese"?
08:47 March 29, 2010 by livinginsweden

I also love glen beck, orielly, sarah palin, stewart, stephen corbet, snl, jackass, mtv, lady gaga, ronald regean, kfc, macdonald, iphone, democracy, 50 cent, tiger woods... obs .. he is half ... elvis, jackson ....

ha ha ha
09:06 March 29, 2010 by querye
The new company will be "Geevolvo"...........
10:06 March 29, 2010 by Jimmy_Mav
"Geely is a (Chinese) *state* owned company."

Geely is 100% private company. Plz do some investigation before you writing the comment.
14:19 March 29, 2010 by americanska
I doubt Geely is truly a private company - China has a strange mix of capitalism and communism.

@livinginsweden - i don't doubt. you couldn't live a day of your life without needing somethign american.

actually try it - then you can see how the rest of the world would manage without america.
15:27 March 29, 2010 by Moodcom
I don't know whats going on...... they are selling one by one.... Next Ericsson. God help Sweden
17:32 March 29, 2010 by Jimmy_Mav
@ americanska

Maybe China has a strange mix of capitalism and communism, but Chinese Companies have not. They just like other companies around the world.
22:47 March 29, 2010 by Volvo D
The darkest days of Volvo lay ahead...
00:58 March 30, 2010 by cporco
This is my third volvo, I hope it's not my last.
18:33 March 30, 2010 by Thebinary1
Here is what's in store for Chinese state-owned companies:

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