Chinese carmaker buys Volvo
CHINESE carmaker Geely has signed a deal to buy Swedish carmaker Volvo Cars from Ford for 1.8 billion dollars.
The move gives Zhejiang Geely Holding Group a European luxury car brand just as China eclipses the US as the world’s largest car market.
The price is about a quarter of the sum Ford paid to acquire Volvo in 1999.
The US carmaker has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands. “We think it’s a fair price for a good business, and yes, we’re happy with the deal we’ve achieved with Geely,” said Ford Chief Financial Officer Lewis.
In a statement, Geely said it has secured all the financing to complete the deal, as well as “significant working capital facilities to fund Volvo Cars’ ongoing business”. The sale is expected to be completed in the third quarter, subject to regulatory approvals. The deal also covers further agreements on intellectual property rights, supply, and research and development arrangements between Volvo Cars, Geely and Ford.
Geely said it aims to keep Volvo’s existing manufacturing facilities in Sweden and Belgium, but that it also will explore manufacturing opportunities in China.
Prof David Bailey of Coventry University said: “The Geely – Volvo deal marks the end of Ford’s ill-fated foray in the premium car market. It burned through a huge amount of cash buying and later selling Aston Martin, Jaguar, Land Rover and Volvo.
“Ford now hopes that the sale of Volvo will free up cash when the deal is completed in the third quarter of this year. Ford will now go back to focusing on its core brands.”
