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Geely has no plans to change Volvo operations

By Matt Brogan |

It’s a pretty safe bet that, barring any unforeseen circumstances, China’s Geely Automotive will take over Ford’s Volvo brand sometime in the new year, which begs the question of just how the well-known brand will change.

Now in response to this question, Geely has reassuringly announced that it has no plans to modify the current business operations of Volvo once the deal is struck.

According to the latest press releases by both Ford and Geely, the sale of the Swedish Volvo brand to the Chinese automaker has been set in motion and is expected to close during the second quarter of 2010. Ford specified that all substantive commercial terms have reached agreement, and now only the details are left to be worked out.

Consumers and critics alike have voiced concern over the future of the Volvo brand under new ownership. Volvo is a brand that has established itself as a leader in safety and innovation and it leans heavily on the public’s belief in these attributes to sell its vehicles. Conversely, Chinese automakers are notorious for having extremely low safety and crash standards, in addition to quality shortfalls.

“If the deal succeeds, nothing will change for Volvo, except the boss turns to Li Shufu,” said Mr Li Shufu, Founder and Chairman of Geely Automotive. “Volvo and Geely will be two independently managed brands.”

Mr Shufu went on to explain that Geely’s primary interest in Volvo was in the development of new energy vehicles, while also saying that Geely hoped to reduce some of the production costs for Volvo, in addition to expanding the Volvo brand into the Chinese market.


 
  • http://skyline The Salesman

    Unfortunately the consumer mind set on Chinese manufacture will affect Volvo. But, the majority of the Volvo flock will remain blissfully unaware of who provides the dollars and i foresee only a blip on the sales radar before a total recovery and perhaps even a market gain (especially in China – Asia)

    • peter

      as a member of that flock (though I dont drive one, my missus does), I’d have to say I would rather volvo cashed up with Chinese dollars (err…whatever) than wallowing in doubt as to its future. It is not so much a matter of being unaware of where the backing might be, rather a matter of being indifferent to the source of the cash, as long as it is there. Ultimately, it could as you say be a positive thing, esp if Geely actually exploits the potential in the brand.

  • TonyB

    Salesman, I agree with you up to a point. The reality is that Volvo has operated at a loss for several years now and there’s no reason to expect this to change in the immediate future with the change of ownership. Spend a bit of time on the various Volvo on-line forums and you realise that the change over to Chinese ownership is going to hit US sales hard. And given the US market accounts for around 50% of the output from the two main European assembly plants (especially the XC60/70/90 that come out of the Swedish plant), this does not look good for those European plants. In the longer term the only way Geely can turn a profit from its Euopean operations is to shut them down and transfer production capacity to their new proposed plant in China. This isn’t going to happen straight away – I suspect maybe 2-3 years down the track. Overall yes, at this time Volvo could start turning a profit from its projected sales in China alone.

    • Safety First

      The other scenario is for Geely to use Vovlo Europe for product design and testing etc… keep the factories open and selling Europe & America. Then Replicate the product in China as a Premium local / Asian product (like other Euro’s do already) thus increasing Volume / profitability of each platform..
      Also platform sharing would raise the quality of it’s own product and, with Volvo’s assistance, create greater acceptance of Geely’s own product world wide.

      • DGS

        Geely could also take a concept Volvo that Volvo is not going to put into production and build it as a Geely for Chinese and International sale offering safty, good dynamics, european engineering at a low drive away price to estbalish their brand as good value for money.

        They can then leave Volvo to carry on business as usual, but use Volvo R&D, mechanical and chassis design on the Geely range, using Volvos interlectual property to rapidly advance the standing of their own brand. In return they just need to keep Volvo R&D plus design studios funded to keep both brands contempery and attractve to their respective markets.

        • Joker

          Spot on. This is the best thing a fledgling Car Company could do.
          Volvo Motors, Safety, Engineering know how… This will put Geely a million miles ahead of other Chinese competition.

  • john

    Well if they start making volvo’s in china and there sale price is more than $23k forget about them as your being ripped off big time.

    • Safety First

      They make VW’s there and Mercedes and Holdens, does that stop you from buying any of those brands???
      Perhaps you forgot to look at the possibilty of them being China ? Asia Domestic market only…

  • Seo

    Volvo have [had?] SAAB disease, selling its product at the same price as Benz, BMW, Lexus etc, HAS NOT and WILL NOT work.

    Need to be HALF the price of listed above if they want to do decent volume.

    THE funniest thing is how Ford lost 5 billion owning Volvo, still not a patch on the 20 billon Benz teared-up on Chrysler!