Geely’s Volvo Acquisition Nears Completion as Ford Prepares to Sell
Ford’s sale of Volvo to China’s Geely could be finalised by the end of August 2009, with a local Swedish partner set to take a minority stake.
Ford’s planned sale of Volvo to Chinese carmaker Geely could be finalised as early as August 2009, according to reports from Sweden. The deal, which has been under negotiation for months, would see Geely take a majority stake in the Swedish brand while a local Swedish company acquires a minority share. Ford is expected to retain a small holding for several years after the sale.
The financial terms under discussion put the total value of the transaction between 20 and 25 billion Swedish Kronor (£1.7–2.1 billion). Geely would pay 15.6 billion SEK for its majority share, while Ford would keep 10 to 15 percent of Volvo for the next seven to eight years. This arrangement is intended to support the launch of new Volvo models and provide continuity during the transition.
Swedish partner eases local concerns
Ford’s decision to include a Swedish partner in the deal follows resistance from Volvo’s engineers’ union and some Swedish government officials, who had voiced concerns about a Chinese takeover. The involvement of a local company appears to have reduced some of that opposition, smoothing the path for the sale to proceed.
Geely’s chairman, Li Shufu, is understood to favour keeping Volvo as a separate entity rather than merging operations. This approach is aimed at maintaining Volvo’s brand identity and engineering base in Sweden, rather than absorbing it into Geely’s existing Chinese operations.
China production plans under consideration
Geely has also been evaluating sites for future Volvo production in China. Dong Guan in Guangdong Province and Tianjin are both under consideration, though other locations such as Beijing and Bazhou in Hebei Province have been rumoured. No final decision on a Chinese manufacturing site has been confirmed.
The outcome of the deal will affect Volvo’s workforce in Sweden and could influence the company’s future product strategy, especially as Geely weighs up its options for Chinese production. The arrangement is also designed to reassure both Swedish stakeholders and Volvo’s global customer base that the marque’s identity and engineering standards will be preserved.
If completed on schedule, the Geely-Volvo agreement would mark one of the largest Chinese acquisitions of a Western carmaker. Ford’s move to sell Volvo comes as part of its broader restructuring and focus on its core brands. For more on Volvo’s presence in China, see Volvo secures Chinese approval for Chengdu factory.
