China’s largest private-run car maker has agreed to buy Volvo cars. Zhejiang Geely Holding Group is paying Ford Motors 1.3 billion euros in cash for the sale.
Geeley’s chairman said he does not plan to merge the two companies. Volvo will remain separate with its own management team in Sweden.
The unions say they back the takeover. But sources say Geeley will slash the Swedish brand’s costs for product-development and manufacturing, by using cheap Chinese labour.
Ford paid almost five billion euros for Volvo eleven years ago, but still says the price is fair. It is the last sale of its premier group, which once included Jaguar and Aston Martin. It helps it free up cash and focus on its core brand.
Ford must use about half the sale proceeds to help pay down billions in debt it secured four years ago.