Volvo buyer plans to unleash 'tiger'
BY BYRON MATHIOUDAKIS AND RON HAMMERTON | 29th Mar 2010
Fresh from signing a $US1.8 billion ($A1.98b) deal to buy Volvo Car Corporation from Ford Motor Company yesterday, Geely chairman Li Shufu said he saw Volvo as a tiger that needed to be liberated.
“Tiger belongs to a forest, it can't be found in a zoo,” he told journalists in Gothenburg, Sweden. “We need to liberate this tiger.
"The tiger has a heart and it lies in Sweden (and) in Belgium but its power should be projected all over the world.
"I see China as one of the markets where Volvo can show it has the opportunity to liberate itself.”Geely and Ford still have to tie up loose ends to close the sale – most likely in the third quarter of 2010 – to bring the second recent Swedish car ownership saga to an end after the recent sale of Saab by General Motors to Spyker NV.
Unlike GM, which will retain a stake in Saab, Ford will exit Volvo completely, barring arrangements to provide assistance in a number of areas to make the transition as smooth as possible for the Chinese.
These will include provision of powertrains, stampings and other vehicle components over varying time frames, as well as engineering support, information technology, access to tooling for common components and other types of selected services.
Geely, China’s largest private car-maker with sales last year of 330,000 units, is set to launch its Chinese brand on to the Australian market through Perth-based Chinese Automotive Distributors about June.
Geely also owns Albury-based transmission maker Drive Systems International, which it bought last year after previous owner SsangYong plunged into bankruptcy.
For Volvo Car Australia, it will be business as usual, with only positive outcomes from the sale to Geely. Managing director Alan Desselss said the ownership switch would ensure that Volvo remained a strong and innovative premium brand.
“It will also provide us with the long-term backing to realise the growth that will result from our exciting new product development, incorporating our ongoing leadership in automotive safety and environmental innovation,” he said.
“We will have an owner with automotive roots and a desire to learn from the brand and dealer strength we have built in the most competitive global markets. That, combined with Geely’s position in the world’s largest emerging market, certainly points to a very positive future for our brand.
“Geely has already stated that it considers the depth of research and development in Sweden as critical to the DNA of the Volvo brand and clearly the strength of the Volvo Car global dealer network is a major asset.
“In short, with a substantial long-term owner that has a deep interest in learning from our core competencies, Volvo cars will continue to provide safe, clean, and satisfying, premium 21st century motoring to even more owners well into the future.”The Volvo sale is subject to what Ford calls “customary closing conditions, including receipt of applicable regulatory approvals”.
Geely was named as the preferred bidder for Volvo last December, but it has taken until now for Ford and the Chinese company to nut out the deal, which is well below the $US6.5 billion Ford paid for the company in 1999.
The agreed price includes about $1.6 billion in cash and $200 million in a note to Ford.
Automotive News reports that Geely’s financing – from a mix of Chinese banks and overseas lenders – also includes $900 million for working capital.
Ford’s sale of Volvo dates back to the closing weeks of 2008 as it tried to stem losses and concentrate on its core Blue Oval brand.
The sale closes the final chapter of what was once its flagship Premier Automotive Group that included Aston Martin, Jaguar and Land Rover. All have since been sold off.
Ford's president and CEO Alan Mulally said the agreement provided a solid foundation for Volvo to continue to build its business under Geely ownership.
"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," he said.
Volvo Cars’ new owner took the opportunity to thank the Americans for the sale of the Swedish marque.
Volvo CEO Stephen Odell said: "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."The Volvo Cars sale to Geely caps off an eventful year for the Swedish car industry after General Motors reversed its late 2009 decision to close down Saab Automobile AB following Dutch supercar-maker Spyker NV’s capitulation to a number of conditions in late January, thus acquiring a majority share in the loss-making concern for just over $A625 million.
