Volvo to be sold to Geely for $1.8 billion

30 Mar 2010 11:20

The announcement that Chinese carmaker Geely is to buy Volvo from Ford for $1.8 billion (£1.2 billion) has underlined the growing significance of China's presence in the global automotive market.

The deal follows nearly two years of negotiations and will look to preserve Volvo as a separate company, with its own management team and production remaining in Sweden.

Geely chairman Li Shufu said: 'We are pleased to have reached this agreement with Ford, enabling us to safeguard and strengthen Volvo's renowned brand heritage. This transaction will ensure Volvo's continued leadership in the premium segment, where it enjoys a global reputation for safety and environmental friendly technologies. This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design.'

However, reflecting the fast-growing Chinese auto market, Geely has said that it will explore opportunities for production of Volvos in China specifically for the local market, which last year saw sales of more than 13 million cars - a rise of nearly 50% on the previous year. Geely says it expects annual sales in China to total 400,000 this year.

Geely says it has secured all necessary financing to complete the transaction, which is expected to close in the third quarter, pending regulatory approvals.

Geely was chosen by Ford as the preferred bidder for Volvo in the autumn last year and is to pay far less for the Swedish brand than the $6.5 billion Ford acquired it for in 1999.

'This agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership,' said Alan Mulally, Ford's chief executive.

Ford, although retaining no ownership in Volvo, is expected to continue supporting the brand with technical expertise and componentry.

Category: Global News
Keywords: Geely, Volvo,