The future of Volvo’s car production should still have its heart in Europe, according to the Chinese company that has just agreed to buy the buy the loss-making Swedish motor manufacturer.
The private Chinese car-maker Geely, who clinched the 1.4 billion euro deal with the current American owners Ford is hoping that access to the latest technology will give a boost to Geely’s brand reputation in China, and that the world’s biggest car market can help return Volvo to profit.
One motorist in Beijing said: “We have been expecting this, but on the other hand it poses a challenge to some Chinese companies to get on to the world stage and improve their global competitiveness.”
Another driver added: “I think the price of Volvo cars might be better for customers after the acquisition, but I am not sure about the after-sales services and build-quality of the cars.”
The price certainly appeared to be right, even though Volvo has been losing money. When Ford bought it in 1999, it cost them more than three times the amount that Geely are paying.
Geely’s charismatic CEO Li Shufu said: “Volvo will be run by Volvo management, it will have the strategic independence to develop its business plan and we are determined to preserve the distinct identity of the Volvo brand. We regard Volvo as a Swedish business with a strong Scandinavian heritage. We will preserve that under a management team headquartered in Gothenburg and led by Volvo executives.”
Geely said it has already secured all of the takeover finance, though it remains open to the possibility of a loan from the European Investment Bank.