Geely to buy Volvo

[Admin]

A lot of press on this... hope it actually happens

Chinese car maker gears up to buy Volvo


News of the sale comes just days after General Motors revealed it had off-loaded technology from its Saab 9-3 and 9-5 models to Beijing Automotive Industry Holding Company (BAIH).

GM has struggled to find a buyer for the rest of its Swedish brand since Dutch sports car maker Koenigsegg backed away from a potential deal last month.

BAIC yesterday revealed it paid GM $200 million (£125m) for the technology, which will allow it to produce Saab-based models as early as 2011.

Dutch luxury car maker Spyker was also in talks to buy Saab, but those negotiations broke down last week, with GM saying it would close down the Swedish marque.

GM is also selling its rugged Hummer brand to construction machinery maker Sichuan Tengzhong Heavy Industrial Machinery Corporation. Both Ford and GM are selling off their "non-core" assets – such as foreign brands Volvo and Saab – to allow the US giants to concentrate on marques sold in their home market.

Ford bought Volvo – renowned for producing the world's safest cars – in 1999 for $6.45 billion but has wanted to offload the firm for the past year. Ford acquired Volvo Cars, while the trucks division carried on trading as a separate Swedish company.

Under Ford's ownership, Volvo continued to shed its "boring and boxy" image and produced award-winning vehicles, including the XC90 sports utility vehicle and the smaller XC60, which this month was named "truck of the year" at the Los Angeles Motor Show.

Volvo spokeswoman Maria Bohlin called the announcement "a step in the process", but noted that the deal "still isn't complete".

Ford said the deal with Geely was still subject to financing and government approval.

Matts Carlson, a motor industry analyst at Goteborg Management Institute, estimated that the price tag for Volvo would be between $2bn and $2.3bn and said a Geely takeover would be good for the Swedish brand.

Carlson added: "Volvo gets a new owner with a lot of money and which I expect will mostly leave it alone because it knows more about vehicle development, sales and distribution."

If his estimate is accurate then the deal would be the largest made by a Chinese car maker.

[KiwiGuy]

The Volvo Buyout: What Geely Really Gets

From China Car Times:

Since early 2009 we have constantly hear rumours that Geely are planning to take over Volvo from Ford, eventually in late 2009 the deal was announced; Geely would become Volvo’s new master. A final price hasn’t been announced, but it is expected to be somewhere in the range from 1.5 billion to 2 billion RMB, considerably less than the 6 billion USD that Ford originally paid for Volvo.

The wording of the Volvo-Geely deal has yet to be finally announced, but some insider information that was leaked to the Chinese internet earlier today claims that:

Geely gets 9 products – S40, S60, S80, C70, C30, XC90, XC60, V50, V70
Three platforms – P1, P2, P24. The P1 platform is especially for compact cars, whilst the P2 platform is for larger sized cars
A worldwide dealership network of 2000 dealers
Access to Volvo supply chain, which will guarantee quality and delivery of products
All Volvo branding
The shopping list is fantastic for Geely, and will raise it from being a backwater car maker to an international player overnight. Geely are apparently hoping for world Volvo sales to hit 2 million units per year worldwide in the next 4 to 5 years, but in the meantime they are apparently aiming for sales of 1 million globally. Currently global sales of Volvo cars are at around 400,000 units, whilst China only accounts for a mere 13,000 cars. Geely are planning to give Volvo their biggest lease of life here in China by giving Volvo some more Chinese ‘design elements’ to make it more popular with local tastes, which doesn’t just mean they’ll be stretching yet more wheelbases to appeal to the Audi A4L crowd.

Financially speaking, Geely are apparently aiming to make a profit from Volvo within a year of ownership, and before 2015 they are aiming to get their investment in Volvo back.

However, some are skeptical saying that Geely will have to rebuild the supplier chain because Volvo's suppliers under Ford threatened to pull out over fears that Geely will get their hands on part drawings and hand them to Chinese companies to produce cheap sub standard parts. And according to some sources, they are also fearful of Geely's "Intellectual property abuse". God knows what that means but I think Geely can handle it. Chinese copy cars have been produced without the need for blueprints.

[Rally Red Lancer GTS]

"However, some are skeptical saying that Geely will have to rebuild the supplier chain because Volvo's suppliers under Ford threatened to pull out over fears that Geely will get their hands on part drawings and hand them to Chinese companies to produce cheap sub standard parts."

What the? I mean, worrying about things is one thing, but this borders on plain and clear stupidity. I mean, how many rigs do Volvo parts fit on, being that they're a "backwater" carmaker, eh? Sheesh.

[KiwiGuy]

I think it is Western anti-Chinese sentiment simply because the change of management to one they hadn't approved. They seem adamant though, but the folks at Jaguar and Range Rover were happy with the switch to Indian company Tata Motors.

[KiwiGuy]

Geely Planning Volvo plant in Beijing

From China Car Times and Rueters:

Reuters is currently reporting that the Volvo – Geely deal is going to see Geely build a Volvo plant near Beijing city where it will be able to pump out several thousand Volvo models per year for the Chinese market place, which is where Geely hopes to make the majority of its money back from the Volvo investment. However, the Chinese media are also reporting that Chang’an and Ford are planning to put the Volvo S60 into production via the Chang’an-Ford-Volvo JV, although it is expected to be imported first to gauge initial demand before going into production. The Chinese press are also reporting that the Volvo purchase will be signed and sealed on February 8th 2010, which is just two weeks from now.

From Reuters:

BEIJING (Reuters) – China’s Zhejiang Geely Holdings will produce up to 300,000 Volvo cars a year at a new factory in Beijing as part of its plan to pull the Swedish brand out of the red by 2011, a source said on Tuesday.

Zhejiang Geely, parent of Hong Kong-listed Geely Automobile (0175.HK), aims to complete the purchase of Ford’s (F.N) Volvo unit for up to $2 billion by May, according to the source and to a document submitted to regulators by Geely and seen by Reuters.

The addition of such capacity would nearly double Geely’s current output, which reached 321,900 units in 2009 for the entire group, up 45 percent from a year earlier. Geely has set an ambitious annual sales target of 2 million cars by 2015.

Analysts said the 2011 break-even target could be a stretch for Geely, which has no experience running a foreign company.

“I think it’s optimistic to break even next year as it needs to build a plant first and it might take time for Chinese buyers to accept a made-in-China Volvo,” said John Zeng, an analyst with IHS Global Insight. “It will break even eventually but that’s going to take time.”

Geely Automobile Holdings Ltd is China’s largest private car maker. Its charismatic founder, Li Shu Fu, sometimes likened to Henry Ford, has shown global ambitions for Geely, which means “lucky” in Chinese.

Ford, the only major U.S. automaker to avoid bankruptcy last year, is selling its luxury Swedish brand to free up cash as it climbs out of the industry’s worst ever downturn.

The deal would see Geely acquire Volvo for $1.5 billion to $2 billion, with an expected closing date in May after the signing of the initial agreement next month, according to a copy of the Geely document.

Geely said in December it was near such a deal, and later added it had strong support from the Chinese government for the purchase.

Geely will set up a separate company with registered capital of 8 billion yuan ($1.17 billion) to buy Volvo. Foreign strategic investors and the Hong Kong-listed Geely will hold a 51 percent stake of the company.

Geely shares were down 3.7 percent, amid a broader market sell-off and following a run-up that saw the shares more than double since mid-September on hopes for a Ford deal.

MAINTAINING SWEDISH OPERATIONS

The purchase would be the biggest in a recent spate of similar acquisitions of distressed global assets by Chinese carmakers, which have thrived during the global downturn due to strong incentives for their industry under Beijing’s 4 trillion yuan ($586 billion) stimulus plan. Under the deal, Geely will keep the brand and operations in Sweden, including Volvo’s headquarters, production facility and research center, intact after the acquisition.

“(Geely) will keep the core value of Volvo as a luxury brand unchanged, while improving it with the development in emerging markets, and add more fashionable, dynamic and passionate international elements,” said the document.

Volvo is expected to post earnings before interest and tax (EBIT) of $703 million in 2015, the document said.

A Geely representative declined to comment.

Among other deals involving Chinese vehicle makers, Sichuan Tengzhong Heavy Industrial Machinery is in the process of buying GM’s GM.UL Hummer brand, though that deal has yet to close and GM said earlier this month it is still awaiting approval by Chinese regulators.

Last month, Beijing Automotive Industry Holding Corp (BAIC) sealed a deal to buy technology from GM’s Saab unit for $200 million, saying it would use the technology to launch an aggressive campaign to develop its brand both at home and overseas.

The buying spree comes as China zoomed past the United States to become the world’s largest auto market last year.

Vehicle sales in the country jumped 46 percent to a record 13.6 million units for the year, according to the China Association of Automobile Manufacturers, well above the 10.4 million cars and light trucks sold in the battered U.S. market.

Analysts expect China’s car sales to continue growing this year under renewed government incentives, though they expect the growth rate to slow to about 10 percent.

Are Volvo feeling Geely for 2010? They should be.

[CCF mod]

Ford has reached a final deal to sell Volvo to Geely for $1.8 billion.

http://www.autoblog.com/2010/03/28/f...r-1-8-billion/

FORD REACHES AGREEMENT TO SELL VOLVO CARS AND RELATED ASSETS TO GEELY; SALE EXPECTED TO CLOSE IN THIRD QUARTER


DEARBORN, Mich., 28, 2010 – Ford Motor Company [NYSE: F] today announced it has entered into a definitive agreement to sell Volvo Car Corporation and related assets to Zhejiang Geely Holding Group Company Limited.
The sale is expected to close in the third quarter of 2010, and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

The purchase price for Volvo Cars and related assets (primarily intellectual property) is $1.8 billion (U.S.), which will be paid in the form of a note in the amount of $200 million (U.S.), and the remainder in cash. The cash portion of the purchase price will be adjusted at close for customary purchase price adjustments relating to pension deficits, debt, cash and working capital, the net effect of which could be a significant decrease in the cash proceeds to Ford.

"Volvo is a great brand with an excellent product lineup. This agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership," said Alan Mulally, Ford's president and CEO. "At the same time, the sale of Volvo will allow us to further sharpen our focus on building the Ford brand around the world and continue to deliver on our One Ford plan serving our customers with the very best cars and trucks in the world."

Ford will continue to cooperate with Volvo Cars in several areas after the sale has been completed in order to ensure a smooth transition, but will not retain any ownership in the Volvo Cars business.

Following completion of the sale, Ford will continue to supply Volvo Cars with, for differing periods, powertrains, stampings and other vehicle components.

As part of the sale, Ford also has committed to provide engineering support, information technology, access to tooling for common components, and other selected services for a transition period to ensure a smooth separation process.

Ford and Geely have established agreements to govern the use of intellectual property; these agreements will allow both Volvo and Ford to deliver their business plans and provide appropriate safeguards against misuse. These agreements also will allow Volvo Cars to grant sublicenses to certain portions of Ford's intellectual property used by Volvo Cars to third parties, including Geely.

"The Volvo team has done an exceptional job of restructuring its business and remaining focused on delivering its plan during the sale process," said Lewis Booth, Ford's chief financial officer. "With Ford's continued investment in Volvo, it has launched its best-ever product range and remained true to its core values – safety, quality, environmental responsibility and modern Scandinavian design.

"We look forward to continuing to work with Volvo Cars, and wish the management team, employees and new owners every success for the future."

"Zhejiang Geely would like to pay tribute to Ford's stewardship of the Volvo brand, and we look forward to continued cooperation as Volvo embarks on the next stage of its evolution with Geely," said Li Shufu, chairman of Zhejiang Geely Holding Group Company Limited.

Stephen Odell, CEO of Volvo Cars, added, "The Volvo management team fully endorses Ford's sale of Volvo Cars to Geely. We believe this is the right outcome for the business, and will provide Volvo Cars with the necessary resources, including the capital investment, to strengthen the business and to continue to move it forward in the future.

"Geely has been very supportive of Volvo Cars' business plans and management team. We look forward to building a strong relationship between Volvo Cars and Geely, and to maintaining a strong relationship with Ford in those areas where we will continue to work together to ensure a smooth transition."

[KiwiGuy]

Geely Chairman flies to Sweden to wrap up sale

From China Car Times:

It seems the big man of the Chinese automobile world is likely in the air right now on his way to officially buy the Volvo unit from a beleagured Ford International that is just bouncing back from last years devastating economy. The Volvo purchase is likely to give Volvo a massive leap in terms of technology and power over its domestic Chinese rivals.

The WSJ has the lowdown:

The chairman of China’s Zhejiang Geely Holding Group Co. traveled to Sweden Friday to finalize his company’s acquisition of Ford Motor Co.’s Volvo car unit, a landmark deal for China’s burgeoning car industry that also poses serious challenges for Geely.

Geely Chairman Li Shufu is expected to preside over the signing of the deal in Sweden as early as Sunday, according to two people close to the Chinese company.

Under the preliminary agreement, Geely will pay $1.8 billion for Ford’s money-losing Swedish car brand with financing from banks in China, the U.S. and Europe, including low-interest loans guaranteed by the governments of Sweden and Belgium, one of the two people said. Geely’s Hong Kong-listed unit, Geely Automobile Holdings Ltd., and some Chinese local governments also would invest in the deal, the person said. He wouldn’t identify those investors.

A final deal would be the culmination of years of planning by Geely and intensive negotiations with Ford over the last 18 months. The deal would make Volvo one of the most prominent foreign brands to be purchased by China, and would mark the first time a Chinese company has acquired the full operations of a major foreign auto maker.

It would also be the biggest step so far in a broader push by China to create a handful of globally competitive auto makers out of an industry that today is largely fragmented. That effort has had mixed success: Beijing Automotive Industry Holding Co. reached an agreement in December to acquire certain assets of General Motors Co.’s Saab unit, but another Chinese company, Sichuan Tengzhong Heavy Industrial Machinery, last month abandoned a planned purchase of GM’s Hummer unit after failing to gain Chinese government approval.

Chinese car makers are gaining strength thanks in part to a home market that has boomed as the rest of the world has sputtered. Passenger-vehicle sales in the country rose nearly 50% last year, with total vehicle sales exceeding 13 million, putting China ahead of the U.S. as the world’s biggest auto market.

Ford and Geely signed a framework agreement for the Volvo transaction in December, and Ford said it expected a definitive agreement to be signed by the end of March and the sale to be finished by midyear.

“The deal is almost done, although there are still some issues that need to be worked out,” said one of the two knowledgeable individuals Friday. “If everything goes well,” he said, the signing will likely be Sunday.

A Ford spokesman didn’t immediately respond to a request for comment.

Chinese Vice President Xi Jinping is scheduled on Saturday to start a three-day visit to Sweden as part of a four-nation European tour. It’s not clear if he would be involved in a Geely-Volvo signing ceremony.

According to one of the two knowledgeable individuals, Mr. Li is elated to clinch the Volvo deal after years of planning, but he feels that the final agreement deal is “only the first step in the direction” Geely has charted for its investment in Volvo, and that “there is a lot more work left.”

Mr. Li plans few changes for the Swedish brand. Geely, one of China’s biggest privately owned auto makers, is expected to keep Volvo’s current management teams unchanged and has no plans to shutter assembly and other factories Volvo operates in Sweden and Belgium or lay off workers employed by those facilities, the person said.

Still, the person said Geely has picked a team within the Hangzhou-based auto company to oversee the Swedish unit. One member of that team is Peter Zhang, a senior Geely executive who played a key role in putting together the financing for the deal. The person declined to say who would head the Volvo team at Geely.

Mr. Li doesn’t plan to change Volvo’s brand positioning significantly, but he is interested in adding two or three bigger, more-luxurious cars to its lineup over the next three to four years to boost global sales, the person said.

Under an aggressive turnaround plan Mr. Li has developed, Volvo would aim to sell nearly a million vehicles a year within four to five years, up from recent annual sales of about 400,000 vehicles. The plan centers on expanding sales in China but also sets ambitious goals for Volvo’s traditional markets of Europe and North America.

Geely plans to build a new Volvo plant in China capable of producing 300,000 vehicles a year as it looks to draw on China’s market potential and inexpensive labor to raise sales and cut costs. Mr. Li said in a recent interview that Tianjin and Beijing are among his top picks for the plant’s site, but the knowledgeable person said Geely was also looking at Guangzhou and Shanghai.

Geely believes Volvo has the potential to sell 200,000 cars a year in China. The company wants to use Volvo’s manufacturing capacity fully in Europe to sell 600,000 vehicles there and in North America.

[Admin]

This is sooo exciting. Last year we say Indian Automaker buy Jaguar and LandRover. Now we (finally) see big China car manufactur buy luxury brand VOLVO!

[green car driver]

I'm pretty sure that Geely will succeed in selling many more Volvo in China, but I wonder about their plans for the european market. Volvo has been on a downward trend for several years now, the new S60 might not be enough to reverse it.

I hope they will try electric cars. Selling chinese cars through Volvo european dealers would not work, but it would be totally different with an electric model.

[Mike619]

i hope geely transfer some technology off volvo into geely