Geely comments raise doubts over Volvo buy

Geely CEO Gui Sengyue has once again caused ripples of concern in Sweden after comments indicating a less independent role for Volvo within the Chinese firm.

When Zhejiang Geely Holding Group signed a contract in late March with Ford to buy Volvo Cars, Geely president and shareholder Li Shufu underlined that Volvo would become an independent company within the group.

Geely’s produces cars through its Geely Automobile subsidiary, which is 51 percent controlled by Li Shufu. The rest of the shares are listed on the Hong Kong stock exchange. Shufu’s comments have hitherto indicated that the two firms should be siblings within the the group.

But when Geely Automobile presented its accounts for 2009 at a press conference in Hong Kong on Tuesday, the car company’s CEO Gui Shengyue painted a different picture. According to Shengyue, Geely’s parent company plans to incorporate Volvo Cars into Geely Automobile.

“It will definitely not take a long time. Maybe three years,” Shengyue said according to Sveriges Radio’s Ekot news programme.

This is not the first time that Geely representatives have made apparently conflicting comments and unions have demanded an explanation.

“It makes me wonder. They do not seem to be working together within Geely,” said union representative Magnus Sundemo.

Sundemo has now forwarded a question to one of Geely’s representatives seeking clarification over the issue.

“They must of course clarify this so that we understand how they work. Internal communication does not seem to be their strong suit,” said Sundemo.

Geely Holdings Swedish spokesman Anders Fogel considers that Shengyue’s statements may be an expression of his own personal dreams. The parent company has no plans to merge the two companies into one car making company, Fogel told Ekot.

“The plan remains to run Volvo as an independent, stand-alone company directly under the parent company,” said Fogel to news agency TT.

Fogel has joined the unions in asking for an explanation over how Shengyue views the takeover of Volvo.

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Sweden’s Volvo Cars may merge with Chinese owner Geely

Sweden's Volvo Cars and its Chinese owner Geely announced on Monday that they are considering merging into a single group in order to share resources, but would preserve their separate brands.

Sweden's Volvo Cars may merge with Chinese owner Geely
File photo of a Volvo test-drive. Photo: Christine Olsson / TT

The merged firm “would have the scale, knowledge and resources to be a leader in the ongoing transformation of the automotive industry,” they said in a statement.

“The combination would preserve the distinct identity of each of the brands Volvo, Geely, Lynk & Co and Polestar,” they added.

Geely bought Volvo in 2010 from Ford which hadn't been able to turn around the Swedish automaker. But under the Chinese firm Volvo has rebounded and smashed its sales records.

Volvo sold more than 705,000 vehicles in 2019, besting the record it set in 2018 by 10 percent, and the automaker expects continued growth this year.

The statement said the firms would create a joint working group to prepare a proposal for the boards of both firms.

“A combined company would have access to the global capital market through Hong Kong and with the intention to subsequently list in Stockholm as well,” it added.

Volvo put off a share listing in 2018 due to tensions in global markets.