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Volvo Sale “Days” Away, Ford Confirms

Sale price likely less than one-third what Ford paid.

by on Mar.26, 2010

By the time the 2011 Volvo S60 hits the street, the Swedish automaker will likely be reporting to a new owner -- in China.

Ford Motor Co. officials say they expect to complete the $1.8 billion sale of Volvo to China’s Zhejiang Geely Holding Group Co. “in the next few days.”

Speculation now is the deal could be signed in Sweden as soon as March 28. Chinese Vice President Xi Jinping will be in Sweden this weekend and is scheduled to visit Gothenburg, where Volvo is based.

Volvo and Geely were scheduled to complete the deal in February to coincide with the Chinese New Year but the deal still wasn’t finished in time, with the Asian maker reportedly short of the cash it needed.

Geely, however, has now lined up the financing required and Ford’s lawyers have completed their review of the documents involved in closing the deal.

Ford originally acquired Volvo for $6 billion in 1999. As it turned out, Ford purchased the Swedish carmaker at the very top of the market for automotive assets.

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Volvo never produced the kind of profits required to earn back that investment, and in recent years has been barely treading water, prompting Ford CEO Alan Mulally to peddle Volvo as part of a general house cleaning at the U.S. maker – which had previously sold off the rest of its once-promising Premier Automotive Group.

The sales of Volvo, Jaguar, Land Rover and Aston-Martin have allowed Ford to focus its attention on the so-called “Blue Oval” brand and even to begin planning a comeback for the beleaguered Lincoln and Mercury.

For Geely, the completion of the deal wiil mean the the start-up Chinese carmaker and its ambitious chairman, Li Shufu, are moving in to the big leagues of the global auto industry. Unlike some of its domestic rivals, such as SAIC, which is tied in with foreign brands such as General Motors and Volkswagen, Geely has steadfastly focused on growing independently.

Chinese automakers, on the whole, have grown steadily larger, during the past decade, but have not yet moved up to premier league level yet.  The acqusition of Volvo should give Geely not just credibility but also an instant global sales network that it could later tap for its own expansion.

Volvo Sale “Days” Away, Ford Confirms

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2 Responses to “Volvo Sale “Days” Away, Ford Confirms”

  1. GenJones says:

    Gee, don’t you mean $1.8 Billion? Even I could afford to buy Volvo for $1.8 Million – I’d tell them a thing or two about how to make and market cars, not what they’ve done (Volvo itself) to make as irrelevant and boring a car design as possible.

  2. tdb says:

    A’yup, Gen, our editors apparently took Friday off. Thanks for the eagle eyes and the correction has been made.
    Paul A. Eisenstein