Chinese automobile corporation Geely Automobile Holdings has reached a preliminary agreement in buying Volvo from the American company Ford Motor Co. According to Chinese media, the value of the transaction will be no less than $ 3 billion. In case of success Geely will model Volvo XC90 at a factory in Guangzhou. According to expert opinion, the acquisition of Volvo will allow Geely to strengthen its positions in the markets of China and Europe.
Reports on the proposed sale of Volvo appeared last year. A number of buyers claimed for the Swedish company, most likely of which were automobile corporations of China and the consortium of European investors. Geely said earlier that it wanted to gain access to technology and the dealer network of Volvo.
The biggest concern among the fans of Volvo is the question whether the current image of the Swedish car as one of the safest in the world will remain. According to the expert of the London School of Economics Thomas Kirhmayera, by buying the leading European car brands, the Chinese are seeking new technologies in order to strengthen their presence in the global market. «The Future of Volvo depends on what strategy the Chinese will choose. They can minimize the production in Europe and transport equipment to their country or leave everything on their places, – the expert said. – However, several signs indicate that they will keep the production in Europe».
Perhaps, Volvo will remain in its usual form thanks to all the strict requirements from Ford. The company warned that the future owner of Volvo must fully comply with the tradition of the brand. There can be no compromise regarding this issue, as opposed to the price. In 1999, Ford bought the Swedish company for more than 6.4 billion dollars, but since the rumors in the market about a possible sale of the brand its value has ranged from 1.2 billion to $ 3 billion. Net loss of Volvo amounted to U.S. $ 510 million in the first quarter of this year. « It is the best time for the Chinese to acquire foreign companies against the backdrop of world recession », – is confident Jia Singuan, the analyst of the leading Chinese National Automotive Industry Consulting and Development Corp.
For Geely brand Volvo is useful not only in the struggle for European consumers, but also for the domestic market of China. Unlike the American brands, the European ones, including Volvo, are known and popular among the Chinese. According to forecasts, in spite of the crisis sales of cars in China will grow by 17% and exceed 10 million units this year. Geely has already doubled its sales, bringing them up to 101 thousand cars from January to May.