News - Volvo
Official: Geely buys Volvo
China’s Geely finally buys Volvo from Ford, as US VW chief takes Swedish reins
3 Aug 2010
SWEDEN’S largest car-maker formally changed hands this week with Ford completing its drawn-out sale of Volvo Cars to China’s Zhejiang Geely Holding Group.
Ford said it would receive $US1.8 billion ($A1.978b) for Volvo, for which it paid $US6.5 billion ($A7.144b) in 1999 before it divested its ownership of Aston Martin in 2007 and Jaguar Land Rover in 2008.
Geely, meantime, has named Volkswagen Group of America chief executive Stefan Jacoby as the new president and CEO of Volvo Cars, replacing Stephen Odell, who is returning to Ford as chairman and CEO of Ford of Europe.
Ford Motor Company CEO Alan Mulally said Volvo was an excellent brand with a strong product line, returning to profit after a successful restructuring.
“We are confident Volvo has a solid future under Geely's ownership,” he said in a statement.
“At the same time, the sale of Volvo will allow us to sharpen our focus on 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.”
Ford has not retained any level of Volvo ownership, but said its agreement with Geely, which plans to launch its own vehicle brand in Australia this year and also owns Australian transmission maker Drivetrain Systems International (DSI), will allow both Volvo and Ford to establish “the proper use of each other's intellectual property”.
Left: New Volvo president Stefan Jacoby. Below: Geely's Li Shufu.
Ford said it would cooperate with Volvo in several areas to ensure a smooth transition, including the continued supply of powertrains, stampings and other vehicle components.
During the transition, Ford will also provide engineering support, information technology, access to tooling for common components and other selected services.
Volvo’s finance chief Stuart Rowley will return to Ford’s European division with Mr Odell. Mr Rowley will be replaced by Volvo’s deputy chief financial officer Hans Oscarsson, who will be acting CFO.
“Volvo is a proud company with a talented and dedicated team of employees,” said Mr Odell. “I am especially pleased that with Ford's continued investment in recent years, Volvo is well positioned for the future with an exciting range of products that remain true to its core values – safety, quality, environmental responsibility and modern Scandinavian design.”
Geely Holding Group chairman Li Shufu, who has been dubbed the Henry Ford of China, has been named chairman of Volvo.
“This is an historic day for Geely, which is extremely proud to have acquired Volvo Cars,” said Mr Li after a signing ceremony in London also attended by Ford’s chief financial officer Lewis Booth, after more than a year of talks.
“The signing and completion of this acquisition reflects the commitment of Ford and Volvo executives to the future of this company, along with the vital input of labour representatives and government officials in Sweden, Belgium and China as well as other relevant countries.
“This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design as it strengthens the existing European and North American markets and expands its presence in China and other emerging markets.”
Mr Jacoby, whose replacement at VW USA has not been named, said he was honoured to head up Volvo in Gothenburg from August 16.
“I am honoured to join a company with the prestige and growth potential of Volvo,” he said. “Our employees, suppliers, dealers – and above all our customers – can be confident that Volvo will preserve its special status as the industry leader in vehicle safety and innovation – even as it pursues new market opportunities.”
After the 100 per cent ownership transaction of Volvo, Mr Jacoby will join the board of Volvo, which will comprise several new directors including Hans-Olov Olsson, a former president and chief executive of Volvo Cars and a former chief marketing officer at Ford, who will become vice-chairman of the board.
Under the new ownership arrangement, Geely said Volvo will retain its headquarters and manufacturing presence in Sweden and Belgium, and “its management will have the autonomy to execute on its business plan under the strategic direction of the board”.
Established in 1986, Geely was one of the fastest growing brands in the world’s largest vehicle market last year, but faces a challenge to return Volvo to profitability.
Volvo posted revenue of $US12.4 billion ($A13.625b) in 2009 by selling 334,000 cars, but recorded a pre-tax loss of $US653 million ($A717.5m).
Volvo was profitable in the first two quarters of this year, when it sold 191,832 vehicles (up 20 per cent on 2009 figures), but last posted a full-year operating profit in 2005, when it lodged a pre-tax profit of $US377 million ($A414m).
On top of the circa-$2 billion it paid for Volvo, Geely has said it will invest up to a further $US900 million ($A989m) to both increase its presence in international luxury car markets and nearly double annual production at its new Volvo China plant.
China is already Volvo’s fourth largest market, aided last year by an 88 per cent sales surge (to 15,497 vehicles) on the back of Volvo’s new China-only long-wheelbase S80L, but Geely hopes to sell 150,000 Volvo cars in China annually by 2015.
Automotive News reports that a number of Chinese cities – including Beijing, Shanghai and Chengdu – are courting Geely for a new Volvo manufacturing site. China’s S40 and S80L are built at a joint-venture factory owned by Ford and Chongqing Changan Automobile Co, which Volvo will continue to employ.
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