Geely Is Sole Bidder For Volvo
If approved, the Belgian loans will only be applicable for Volvo’s local operations
Ford is having trouble offloading its failing Volvo subsidiary but the company is determined to sell and in spite of the tough economic conditions still has several potential buyers. According to latest reports, however, the only potential buyer that has so far placed a bid for the Swedish automaker is China’s Geely.
Swedish newspaper Dagens Industri is reporting that Geely has signed a letter of intent to purchase Volvo from Ford, citing several anonymous sources within the Chinese government. The source revealed that Geely and Ford were still nailing out the details, including the transfer of technology, Volvo’s marketing and market position and possibly layoffs, and that the Chinese automaker hopes to start production of Volvo cars in a new factory in the Guangdong Province of China.
As part of the deal, Geely will reportedly invest up to $10 billion in building the Volvo brand and the first model to be fully designed under the guidance of the Chinese automaker will be the next-generation XC90 due in 2011.
Previous reports suggested that Chinese automakers Dongfeng Motor Group, Beijing Auto and Chongqing Changan Automobile Co, as well as a European constellation, were among the final bidders.
Volvo was looking almost unsellable just a few months ago but with the Swedish government announcing it is willing to back $572 million in loan guarantees for the automaker, the deal has been sweetened a little. Furthermore, a Chinese company could benefit greatly from acquiring Volvo, especially with the Swedish automaker’s research and development teams and reputation for safety, which so far has been lacking in most Chinese made cars. Volvo’s North American dealership network could also prove attractive to emerging Chinese buyers in particular.
Incidentally, Ford bought Volvo for $6.45 billion back in 1999 and has since written down its value to less than $2.4 billion. With the state of the industry and the economy in general, however, the final sale price could be substantially lower.
Source:motorauthority.com
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