Ford sells its Volvo brand to Geely of China

Ford has finally decided to get rid of its Volvo brand. The American company got into an agreement to sell Volvo and related assets to Zhejiang Geely Holding Group of China for Rs 815 crore. The sale is officially expected to be closed by the third quarter of 2010. Much of this time will be consumed in getting permissions from governments in countries where the Swedish brand has presence.

Ford is completely selling off the Volvo brand, and will not keep any of the shares with it. Ford, that bought Volvo in 1999 hasn’t been able to make much of the deal, as the Swedish brand has not made any money since 2005.

As a part of the deal, Ford will keep supplying Volvo critical components. Ford will also reportedly provide support in terms of engineering, IT and other areas before the Chinese company could manage these things all by itself. The deal also includes the use of some of Ford’s intellectual property rights by Volvo and Geely.

Commending on the development, Alan Mulally, Ford’s president and CEO said “Volvo is a great brand with an excellent product line-up. This agreement provides a solid foundation for Volvo to continue to build its business under Geely’s ownership. At the same time, the sale of Volvo will allow us to further sharpen our focus on building the Ford brand around the world.”

 

Geely Chairman Li Shufu, on the occasion, said, 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. As part of the proposed transaction, Zhejiang Geely Holdings will maintain the strong collaborative relationships that Volvo has built with employees, unions, suppliers, dealers and above all, customers. On completion, Volvo Cars will be a separate company with its own management team based in Gothenburg, Sweden, and a new board of directors."

Geely has raised the loan for this deal from banks in China, USA and Europe, and loans guaranteed by the governments of Sweden and Belgium. First impressions suggest that production of Volvos will continue in Sweden and Belgium to stay closer to the supplier chain and the main market.

GM India to launch Chinese cars?

General Motors (GM) is currently in an advanced stage of talks with its partners in China regarding a plan to launch their cars in India. In fact, GM had initiated talks with its China based partners Shanghai Automotive Industry Corp (SAIC) and Wuling around eight months earlier. The above mentioned companies have a three-way tie-up with GM in China called as SAIC-GM-Wuling Automobile Co.


According to Karl Slym, President and Managing Director, GM India, now the company knows what can work in India and what cannot. He further added that they are currently at a point from where they will be able to make a decision very soon.

SAIC-GM-Wuling Automobile Co currently sells passenger vehicles, commercial vehicles, small trucks and the Chevrolet Spark small car. Karl Slym also said that they also would be very successful if GM can adapt them through their engineering centre into India.

China's Car Sales Increase by 77%

In China, over 13 lakh cars were sold in September and was an increase of over 77% over the same period month last year reports an automotive body of China. China is currently the worlds largest car market after surpassing car sales in the US during January this year.

GM Sells HUMMER To Chinese Auto Maker

General motors has come into an agreement with a small chinese heavy machinery maker to sell the brand Hummer. Last time another Chinese auto major grabbed Rover from UK. China being one of the fastest growing countries has now stepped up to take Hummer.

Hummer seen as one of the gas guzzling SUV's has been hit hard on sales since its high in 2006.