Volvo Cars – Made in China?

The next Volvo you buy may just come with a Made in China stamp if reports from Ford prove correct.

It seems that the US car giant and China run Zhejiang Geely Holding Group Limited have settled all major commercial terms related to the sale of Volvo Car Corporation and the deal should be finalised, including total transfer of Volvo’s valuable intellectual property by the second quarter 2010.

The final sales price is said to be around USD$2 billion, which is substantially less than the USD$6.45 billion Ford payed for the Swedish car company back in 1999.

Ford said that although it will continue to cooperate with Volvo Cars after the sale has gone through, it does not intend to retain any shareholding in the company.

Clearly, this a big deal for Geely, as they are looking for assistance from the Chinese government in addition to three major Chinese banks who have agreed to loans for the Volvo sale.

Despite what some of you may be thinking, the impending sale will most likely be a good thing for Volvo. The brand will remain alive and allowed to grow through stronger investment in new models, while Geely will undoubtedly take full advantage of Volvo's worldwide dealer network, which may even be strengthened in due course.

Ford is keen to remain focused on its domestic brands with US sales remaining relatively flat compared with that of 2008.

CarAdvice has just returned from the US and can report many businesses are up to 50 percent down on the previous year’s sales, which has been a strong incentive for Ford to exit from its non-core automotive brands.