Final agreement will be signed in first quarter of 2010
23 December 2009

Ford has confirmed it has agreed "all substantive commercial terms" of Volvo's sale to Geely.

The announcement is viewed as a precursor to Geely seeking permission from the Chinese government to go ahead with the deal, something it must receive if the sale is to go through.

Sources suggest there is no set timeframe for such approval being given, and that it could take anything from days to several months.

Ford paid $6 billion (£3.7bn) in 1999 to buy Volvo; unconfirmed reports have said that Geely could pay $2bn (£1.2bn).

In a statement, Ford said: "Ford Motor Company confirmed today that all substantive commercial terms relating to the potential sale of Volvo Car Corporation have been settled between Ford and Zhejiang Geely Holding Group Company Limited.

"While some work still remains to be completed before signing – including final documentation, financing and government approvals – Ford and Geely anticipate that a definitive sale agreement will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter 2010, subject to appropriate regulatory approvals.

"The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core ONE Ford strategy.

"While Ford would continue to co-operate with Volvo Cars in several areas after a possible sale, the company does not intend to retain a shareholding in the business post-sale."

Volvo Cars was founded in the Swedish city of Gothenburg in 1927 and hase 22,000 employees worldwide, around 16,000 of whom work in Sweden.

Geely has already moved to assure Volvo's management that it will not radically alter the company's set-up. In a statement, Li Shufu, Geely’s chairman, said: “Geely is committed to work with all stakeholders to complete the transaction in the best interest of all parties.

“Volvo will retain its leadership in safety and environmental technologies, and will be uniquely positioned as a world-leading premium brand to exploit opportunities in the fast-growing China market."

Ford announced last December it wanted to sell Volvo.

The US company picked Geely in October 2009 as preferred bidder for Volvo.

Geely last month said it had reached an agreement with Ford to own the intellectual property rights on Volvo's key technologies, including those related to safety and the environment.

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Comments
7

23 December 2009

This cannot be true! It's standard operating procedure for American automobile companies to d!ck buyers around for minimum twelve months, then call the sale off. Have the executives at Ford lost their senses!? This will not go down well with Comrade Obama, his Auto Czar and the loyal apparatchiks at Government Motors. Poor show Ford.

23 December 2009

What a shame.

With Saab just about out of the game and little hope of Ford elevating themselves into the premium or near premium perception segment of the market, future profitability streams will be a one horse race for the Blue Oval, especially so in Europe and China.

I wonder how in 6 or 10 year's time the Board at Ford will rue this decision. Talk about handing Geely a golden sovereign!

23 December 2009

ownership of brands under the blue oval and gm seem to be dwindling away like there is no tomorrow! while vw are going from strength to strength (pardon the peugeot pun which these days is far from true) the germans will rule shortly

23 December 2009

[quote the instigator]little hope of Ford elevating themselves into the premium or near premium perception segment of the market, future profitability streams will be a one horse race for the Blue Oval, especially so in Europe and China. [/quote]

It's true this goes against much of the conventional wisdom of the last twenty years and also against the gospel according to Volkswagen, i.e. that mass car makers need premium brands to achieve fat margins otherwise they'll succumb to Asian competition. However, Ford has calculated that the greater advantage lies in drastically simplifying its operations and consolidating them under the blue oval badge.

Given the development of Jaguar, Saab, Land Rover, Volvo and all the rest over the last few years, none of which have really thrown off large amounts of cash in the direction of their owners even in the good times, you'd have to say it may have a point.

I'm not sure when, if ever, Ford will be a premium badge, but the actual products do have many of the characteristics of premium vehicles these days.

23 December 2009

This is a real worry. Lets hope Volvo can still access other makers engines and continues to get some development cash. They seem to be gaining a genuine premium feel. Just imagine what they will be like after chinese style cost cutting. I worry Geely will move everything they can into China, focus on increased in country production and leave only a marketing and small R&D department.

23 December 2009

Whilst Volvo will win it's survival - at least in the short term - from this deal, I suspect that Geely will be the real winner here, by gaining some first-class know-how. Having said that, I do hope that Geely can provide Volvo with some development cash to improve their interiors. We recently considered buying a V50, and were totally underwhelmed by the seats and the interior design. A Golf or a Focus is much better and, notwithstanding the car's age, the 40/50 should be a whole lot better.

24 December 2009

i just hope geely dont do a bmw and rip it apart and take the good stuff volvo has and throw whats left to the dogs because that would be sad and diabolical but in saying that tata has done a good job with jaguar land rover so only time will tell lets all hope they leave volvo to just get on with it ay merry xmas everyone

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