Technology rights deal paves way for Volvo sale

A MAJOR stumbling block may have been removed from the sale of Swedish car-maker Volvo with apparent agreement between seller Ford Motor Company and preferred bidder Zhejiang Geely Holding Group on Volvo’s intellectual property rights.

A Geely spokesman told Reuters in Europe that Hong Kong-based Geely would obtain Volvo's key technologies and intellectual property through the acquisition, and would also be eligible to use some Ford technologies held by Volvo, including those relating to safety and environmental protection.

Ford would be allowed access to any technologies that are crucial to the feature of its business, including safety and environmental features, but Geely would not have access to any similar technology developed by Ford, Reuters reported.

There was no immediate official response from Ford to the reports, which surfaced on China’s official Xinhua news agency news service before being confirmed by the Geely spokesman in Europe.

Although no price-tag has been placed on the Volvo sale, several reports suggest Geely is likely to pay about $2 billion ($A2.17b) for the brand and its various operations, including the research and development centre in Sweden and various factories in Europe.

Left: Geely MK.

Geely Holding is the unlisted parent company of Geely Automobile which has embarked on an ambitious expansion program at home in China and abroad, with the goal of making two million cars a year by 2015 – two-thirds of them for export.

Geely – which is set to begin exports of the MK small car to Australia through Perth-based Chinese Automotive Distributors in the first quarter of 2010 – also wants to establish 15 overseas production bases within the next five years.

Chinese car-makers have eyed the technology of western motor companies, with acquisition of car-makers such as Volvo seen to be a short-cut to leading-edge safety and environmental skills.

However, wary western motor companies have been reluctant to sign over a blank cheque on technology – a reluctance that has helped to derail several potential sales to date in the wake of the global financial crisis.

Ford, which bought Volvo in 1999, has said that it does not want to retain a shareholding in Volvo after the sale, despite its interest in a continuing technological relationship.

Ford also has said it has no specific timeline in mind for the sale of Volvo, which it put up for sale late last year.

The apparent progress of the Volvo sale by Ford is in contrast with the sad state of sales negotiations by GM for the other Swedish car-maker, Saab Automobile.

Supercar-maker Koenigsegg Group AB last week pulled out a deal to buy Saab after six months of negotiation, and the future of Saab now appears to rest on a decision by the GM board at its meeting this week.