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Volvo Australia chief talks up Geely deal

Positive outcome: Ford is looking for the right buyer for Volvo.

Volvo Australia chief says Chinese buyout would be good news for most customers

Volvo logo7 Dec 2009

VOLVO Car Australia managing director Alan Desselss believes some potential customers might be put off by the prospect of its parent company being sold to Chinese brand Geely, but insists the outcome would likely be overwhelmingly positive.

Ford Motor Company is in the process of selling Volvo to Geely, having declared the Chinese brand the preferred bidder and reportedly signing off on a deal covering the intellectual rights.

Asked by GoAuto if Chinese ownership of Volvo could put some customers off, Mr Desselss said it was hard to tell.

“I think that there might be a reaction in the beginning, but then again Jaguar and Land Rover, they are now Indian owned and does it matter to them? I don’t think so,” he said.

 center imageLeft: Volvo Car Australia managing director Alan Desselss.

“When Ford originally bought Volvo back in 1998, the world was going to end then and it was all doom and gloom and Ford was actually very good for Volvo.”

Mr Desselss also used the example of prestige brands building vehicles outside Europe and the US.

“Look at Mercedes and BMW and they build cars in South Africa and that was quite tumultuous when they decided to import the 3 Series from there, but now no one cares. As long as it is made by Volvo it has all of the Volvo core values,” he said.

Mr Desselss said Geely appeared to be a good owner for Volvo because it seemed prepared to invest in the brand.

“As long as they do what they say they will do, and that is to invest in the brand and keep the models coming through, then that has got to be a major positive,” he said.

“I couldn’t imagine Geely would buy Volvo and not invest in the products we have got coming it wouldn’t make sense.”

Mr Desselss said China was the most likely source of an appropriate new owner for Volvo given the current economic climate.

“Who are the people with money at the moment? It (the owner) has got to come out of China, it certainly can’t come out of America, certainly it can’t come out of Europe and probably the only company that could have done it is Tata and they have already committed themselves to Jaguar and Land Rover.”

A Geely buyout would be a positive outcome from the perspective of Volvo dealers in Australia because it would most likely mean they would not lose the franchise to dealers aligned with rival brands.

“Geely do not have an infrastructure, so it means the dealer network is safe, if I can use inverted commas for the word safe,” he said.

“If it was a Renault or a BMW there would be questions about what was going to happen to the dealer network ‘am I going to lose the franchise?&rsquo.”

While Mr Desselss said concluding a deal would bring certainty, he said customers did not appear concerned about the likely sale of Volvo.

“I can only go by the sales and they suggest that people don’t care,” he said.

“We are probably going to be stronger than we were last year. We won’t quite get back to our 2007 levels, but we would be pretty close and there are not too many brands around who can say that.”

VFACTS data shows Volvo has sold 4111 cars in Australia to the end of November, compared with 3966 in the same period last year.

After GoAuto’s interview with Mr Desselss, the Wall Street Journal reported that a group led by a former Ford and Chrysler executives submitted a revised bid for Volvo, offering similar money to Geely.

The report said former Ford director Michael Dingman and Chrysler executive were heading up the group called the Crown consortium.

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