Chinese firm plans three new luxury models to boost worldwide sales
11 November 2009

Geely plans to launch up to three new luxury Volvo models within four years of taking over the firm from Ford, according to company sources.

Sources close to the Zhejiang Geely Holding Group, which is Ford’s preferred bidder for Volvo, told the Wall Street Journal that the firm would sell two or three bigger, more luxurious cars within the next four years to try and boost global sales.

As part of Geely’s restructuring plan for Volvo, it plans to boost global sales to more than one million units per year. Volvo’s current sales are around 400,000 units per year, but Geely plans to more than double this number within five years.

To achieve this, it plans to build a new plant in China with the capability of producing 300,000 units per year. The firm predicts that Volvo could sell up to 200,000 units per year in China a year. Last year, it sold 12,600 units.

Geely’s offer for Volvo is believed to be around two billion euro (£1.2bn), but the sources claim the sale will be long and drawn out due to issues over intellectual property rights.

The issues are what Ford intellectual would transfer to Volvo and how Ford would continue to use Volvo intellectual property, including its pioneering safety technology. The two will also decide how to sort out any future intellectual property issues, which may occur later.

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Comments
8

11 November 2009

Sounds far too optimistic if you ask me.

11 November 2009

Not being a Volvo fan , I don't really care , but since Ford (Europe) are not in serious trouble I reckon they would be better-off keeping Volvo for themselves. They can make bigger profits from selling cars that don't have a four-letter word on the bonnet.

11 November 2009

I'm beginning to think that Ford will keep Volvo. If they sell it to Geely, they will have to share their IP because that IP is engineered into Volvo's cars. If you take it away, Volvo won't be able to make the existing cars, let alone develop new ones from the current range. If Ford are keen to keep their hands on Volvo's safety technology too, that will make Volvo even less attractive. Safety technology is key to Volvo's market positioning.

12 November 2009

I also think Ford should keep Volvo. Volvo is too embedded into Ford that the successful bidder cannot effectively and efficiently segregate it from Ford in the short-term without some drastic actions taken. Realistically, I think Geely can only begin to execute plans to wean Volvo off Ford's tutelage 5 to 10 years from now. And by that time, Geely better be in a position to replace all Ford content either by sourcing them from third parties or design and engineer them internally.

Maybe Geely should just walk away.......................

12 November 2009

[quote Chunkster]I also think Ford should keep Volvo. Volvo is too embedded into Ford that the successful bidder cannot effectively and efficiently segregate it from Ford in the short-term without some drastic actions taken.[/quote]

Yes, Ford are far too intertwined with Volvo for their own good, but they have proved over recent years that they have not got the capability as an organisation to run it successfully. Fortunately someone in Ford has seen this and they realise that they need to off load it, even if it does have some "technical" cost to them.

In the long term, it still makes sense.

 

 

It's all about the twisties........

12 November 2009

I hope Ford do a GM and decide to keep Volvo - by selling brands to the Chinese, western manufacturers in my view are only putting the first nails in their own coffins. Sure, the Chinese will catch up as the the Koreans have, but why help to vastly accelerate that process and give them the cachet of a reputable brand. Ford still need a brand above the parent company - one day perhaps Ford in Europe might be seen as comparable to VW (although still a mighty long way off in my view!), but there is still a lot of market to capture above this. Premium is still the way forward. In 20 years time, Ford might regret this.

12 November 2009

"two billion euro (£1.2bn)"

Rather £1.8bn.

12 November 2009

[quote optimal_909]

"two billion euro (£1.2bn)"

Rather £1.8bn.

[/quote]

Or two bn USD...

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