We have recently been reading about Saab's sale to Spyker from General Motors. Now the other, purportedly more famous Swedish car company Volvo has officially been sold to China's Geely. Volvo is most famous for their brick-like 240 series vehicles, the P1800 coupe (due to it being featured in the television series 'The Saint' in the 1960s) and very fast semi-brick like 850T5 wagons that actually raced in the British Touring Car Championship (BTCC) in the 1990s. Ford, the previous owners of the brand has sold the company for £1.2 billion. The sale is due to be completed by the end of this year and as part of the agreed lengthly ownership transition process, Ford will continue to provide powertrains and engineering help to Geely. All of which under an intellectual property agreement to protect Ford's technology secrets that will be utilized on future Volvos already planned by Ford before the sale.
According to new releases, Volvo's headquarters will remain in Sweden as its core customer base is still Europe, with Russia as their largest new market there. China and India are their faster growing markets and with Geely owning Volvo, the brand will be marketed even more widely in China.
Ford bought Volvo in 1999 for £4.34billion, making this new deal a loss to Ford. But Ford has figured out that it is better to cut losses as it has not made a decent profit since it first took over the brand. It has been looking for a buyer since 2008.
For those interested in some information on Geely, the company started in 1986 as a manufacturer of refrigerators, then moved to manufacturing decoration materials in 1989, and by 1992, motorcycle parts. In 1994, Geely began manufacturing motorcycles. Automobile production started in 1998. Geely began exporting its first cars in 2003. Geely's chairman and founder, Li Shufu, has the ambition to sell two-thirds of the company's vehicle output overseas, though he is non-committed as to when that could happen. In a March 2005 forum held in Beijing, he was quoted as saying:
“We must make cars like people from Wenzhou make [a quarter of the world's] lighters. But developing a car industry is like growing one tree slowly to cover a whole forest.”
Quite eloquently put if I may say so myself. Now with the purchase of Volvo, this dream would be made to happen even more quickly as in 2009 Geely sold about 320,000 vehicles, and Volvo sold about 334,000 vehicles and 22,000 of it in China. As Volvo is not built in China and a lot of these are sold outside of China, that would mean that Geely is halfway to reaching the two-thirds target, by buying up Volvo. Money is a fast track way to achieve a certain goal.
So we now have another Ford premium car brand sold to another Asian giant. Jaguar to TATA and now Volvo to Geely. But I do not think that this would affect Volvo in detrimental way. Looking at Jaguar under TATA's ownership over the past one year, things do not look so bad for them as brand acceptance is still high and their cars are praised. Things could look fine for Volvo too if they examine and in some ways follow TATA's policies in running a foreign (not one based in India) brand. I also have to add with the heritage Volvo has, it needs really good products to ensure the heritage angle can be properly marketed. Just don't build anymore bricks but take the classic P1800 or the 122s (which aren't bricks) as good design examples of what a Volvo should be.
Anyway, economic power has shifted even more to Asia and this is a good thing as people elsewhere are sitting up and listening to Asian viewpoints. If not, a premium car manufacturer from Germany wouldn't even think of launching their flagship coupe a few short months from its official European launch.
- a Volvo
- a Geely. Hmmm, if you switch the grills on both of the cars either car could pass for the other. Is that good or bad?