Volvo has now been sold by Ford to China's Geely
Ford have finally concluded a deal with China’s Geely for the sale of Volvo for £1.2 billion. The sale will complete in the third quarter of 2010.
It was beginning to look like Ford would never divest itself of its foster child Volvo. After all, two of its other troublesome foster children – Aston Martin and Jaguar Land Rover – found new homes some time ago with more involved parents who understood them better. But finally Ford have signed an agreement with China’s Zhejiang Geely Holding Group for the sale of Volvo for £1.2 billion. Ford paid £4.3 billion for the Swede in 1999 and has never had a profitable day of trading with it.
Under the terms of the agreement – which will close in the third quarter of this year – Geely will pay Ford all but $200 million in cash – a welcome injection for Ford – with the ultimate price paid linked to the state of Volvo’s finances and pension obligations at the point of transfer.
Ford will continue to supply components – including powertrains – for an unspecified period and will also supply information technology, access to tooling and other support services. Geely have given assurances that Volvos will continue to be built in Gothenburg and that the current structure of Volvo will be maintained with the same CEO – Stephen Odell – at the helm.
Which all augers well if access to China’s vast market helps shift more cars. However we reported in November that Geely are planning a new Volvo factory in China with a capacity of 300,000 cars, which will probably be enough to fulfil any demand from Geely’s home market. Geely’s stated intention is to push Volvo up to 1 million cars a year over the next five years.
Let’s hope Geely’s drive and access to the huge car market in China give Volvo a new lease of life.
Have your say - leave a comment