Little more than a year ago, the name Geely would happily slip under the radar of most. Today, the Chinese company completed its purchase of Volvo from Ford. Geely stumped up a $1.3 billion in cash for the Swedish brand and issued a $200m note.
The figure is slightly less than the $1.8bn fee agreed between the two parties in March 2010, but finally brings an end to a long drawn-out sale since Ford’s decision was first announced on 1 December 2008. It also shows how badly Ford’s fingers are burned: it paid $6.45bn for Volvo back in 1999.
Stefan Jacoby, formerly head of Volkswagen in north America, was today named the new CEO and president of Volvo Cars.
What’s new now Volvo is owned by Geely?
The sale of Volvo marks the end of Ford’s plan to build a global group of super-brands, conceived under previous CEO Jacques Nasser. The Blue Oval has already sold Jaguar Land Rover to Tata Motors and Aston Martin to Kuwaiti led investors.
Alan Mulally, Ford’s president and CEO, is confident of Volvo’s future under Chinese rule. ‘Volvo is an excellent brand with a strong product line, and it has returned to profits after a successful restructuring,’ he said. ‘We are confident Volvo has a solid future under Geely’s ownership. At the same time, the sale of Volvo will allow us to sharpen our focus on the Ford brand around the world and continue to deliver on our One Ford plan serving our customers with the very best cars and trucks in the world.’
What are Geely’s plans for Volvo?
Geely has already outlined its strategy and plans for Volvo: it wants to double production figures within five years, a move that is more than possible by establishing a market share for Volvo in China.
Under the terms of the deal, Ford will continue to cooperate with Volvo to ensure a smooth transition. It will supply powertrains and other components, as well as advice and engineering support for a fixed timescale throughout the transition period.
One of the controversial areas of the sale was the intellectual property of each party; Ford was paranoid about group IP being available to the Chinese, but both parties say satisfactory safeguards have been built into the deal.
Stephen Odell, Volvo CEO, is quitting the top office in Gothenburg and will head up Ford of Europe. Volvo’s new chairman is Li Shufu, Geely’s top man and Volvo’s next CEO was named this morning as Stefan Jacoby.
Odell will take over as CEO and chairman of Ford’s European arm from current executive vice president John Fleming, who’s destined to take over Ford’s global manufacturing gig.