Chang’an in talks with Ford for Volvo
According to yesterdays rumours, it seems that an unlikely Chinese player has stepped upto the table to take Volvo off Ford’s hands. Chang’an and Ford are joint venture partners in China, and do actually produce the Volvo S40 in China, and assemble the S80 as well, but it seems that Chang’an may actually want to step up to the plate and take over Volvo completely. Volvo executives and Chang’an executives had high level meetings during last months Guangzhou Auto Show, after the show ended Ford Asia executives and Chang’an executives had a second meeting in Chongqing.
Ford is looking for around 6 Billion USD for Volvo, several other Chinese companies such as SAIC, FAW, Chery, and Dongfeng have all been rumoured to be interested in Volvo, however, Chang’an may actually be the best bet for Volvo as they already have production bases set up for the S40 and S80, and they also produce many cars based on similar platforms such as the Ford Focus, and Ford Mondeo.
By gaining control of Volvo, Chang’an stands to gain a great deal of automotive history as well as technology. The Volvo brand is no where near as tainted as the MG brand that SAIC currently control, and also the technology that will come with a Volvo sale would be the most advanced a Chinese company controls. The Volvo sales network is also very widespread, and extremely mature, it could be a great oppertunity for Chang’an to build on Volvo’s success in building their own Chang’an brand overseas.
Chang’an is an automotive powerhouse in the south west of China, located in Chongqing city, they’ve managed to sign Ford, Mazda,Volvo, and Suzuki as joint venture partners to produce a wide range of cars in China, as well as their own brand of cars which have been very well received in China and abroad.
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Where is Chang’an going to get $6 billion dollars?
Chinese dreams of an export market for their cars need to end, now. This depression will end any chances to export for the next 10-15 years.
this is probably just another rumour, why would Chang’an buy an ailing brand ? to waste more money to prop it up ?
charlie, how do you know the world economic downturn will last 10-15 years ? are you an economist ?
I have no idea how long the depression will last, but the car industry is a long term investment. Changes in the next 2-3 years will play out for the next 10.
Given the massive reduction in car sales worldwide in the next three years, there is going to be massive overcapacity in production. Given how weak chinese cars are, and the global overcapacity, there is very little entry point for Chinese cars. Chinese car companies may do well in their internal markets, but they aren’t going to be exporting.
Under the best of circumstances, it would take 7 years of investments for the Chinese to move up to Korean levels of quality. Given this bump, it will now take 15 years (2-3 generations of development).
Colleagues,
Believe that most of the comments are coming from a Tradition Thinking. I will tell you something: KNOW HOW IS JUST A COMMODITY! IF YOU PAY YOU GET IT!
Don’t anyone think that Chinese will keep seeting waiting the know-how and technology hit their doors. They have moved always quickier and in clever way to reach the present stage of Automotive Industry. And believe me they did it better even than the Japanese and South Koreans did. Because Chinese were faster.
By the other hand, it was quite logical that Changan Group would do trials to undertake Volvo (I mean trials because no one knows if it is already concluded). Or did one think before that Tata could buy Jaguar and Land Rover?
The main point for a Chinese Brand to buy an Ocidental Brand right now is the availability of Authorize Dealers Net in the European, North-Central-South American Countries. Something that costs much more than the acquiring of technology.
By the other hand to those ones who think that the Crisis will break down exports/imports of vehicles for the next 15 years it is just impossible. The imperative matters to keep the exchange of Vehicles worldwide regards to Duties, Logistic Costs and Acquiring of Raw Materials and Men Power availabilities. The temporay break down concerns to the low selling volumes and the lack of credit, these both in combination with a new situation from the Cost Table will surely create deep changes in the Market Worldwide.
That is the change, which is in course since years already, that the 3 Big Americans are not able to learn.
Regards,
J.I.Hosang
Buying a brand for expansion is good and I have been supportive of this strategy all along. Given that China’s car image is tainted with safety problems, learning from one of the safest car in the world could not be a bad idea after all. The problem is with the price tag. How can it be justified to pay 6B USD for a brand name at this moment when economy is in a downturn? Ford purchased it for 6+ Billion USD years ago and bleeding money for this product thereafter. I would suggest to them to buy at a lower price. Probably half the amount asked. then, it should be worthwhile.
Agreed. 6 billion for Volvo is 3 billion too much.
Although I expect many Chinese companies are ‘Pulling a SAIC’ and waiting for many Western Auto makers to go bankrupt and then buying up their assets at a firesale like environment.
Colleagues,
You are fully right! The Chinese Automakers are just waiting the selling of the Western Automakers bankrupcy. Concerning Volvo, what makes today the price of Volvo , beside of the technology they will bring with (because their cars today have part of the know how from Jaguar, Ford and Mazda)the Dealers worldwide, which would be able and forced to immediatelly keep sellings from Volvo running with the possibility to start selling another division inside (Chana, Jiangling, Landwind and so on).
Would say that the brands place for sale in the next months would be:
From GM: Saturn, Pontiac, Buick, Hummer and the right over the names GEO and Oldsmobile.
From Chrysler: They would be splitted by Cerberus, Dodge, Chrysler, Jeep and the rights over the name Plymouth.
Ford: Mercury and Volvo
VW: Seat and Lamborghini
Fiat: Lancia, Autobianchi and Innocenti.
This considering the problems that are already affecting the European Market. We need right now just to see how this crisis will catch the Japanese and South Koreans Automakers.
Best regards,
J.I.Hosang
Do you think Seat will be sold? They are a cheaper brand, but they appeal to young buyers that the Skoda and VW models cant reach.
I think Mercury will just end, nobody outside of the USA knows that brand.
Dear Ash,
Sincerelly: Yes! Firstly because the investments on the brand have reduced since the last years and some sourcers from the Spanish Press have advertised before this possibility, even saying that Chery and FAW where interested on the brand. The volume of selling from SEAT, anyhow is just small and SEAT keeps as a passport to enter European Market quick.
However I need to tell you that in the last weeks when the Spanish Government have offered a help to the Spanish Automotive Industry they could thing twice about this possibility and/or Spain could bring some conditions to the help offered.
Concerning Mercury, what makes that division interesting, like all other Divisions which belongs to the 3 Big Americans is the quantity of authorized dealers available in México, USA and Canada. The investments to open a Dealer’s Net is just bigger than to start assembling cars with a complete new plant. And I believe make sense to invest to get this net, when what is right now the main point is to have increased the possibility to increase selling volume and the number of available markets.
Best regards,
J.I.Hosang
DEAR SIR,
ON BEHALF OF MY CLIENTS (VIP), I FORWARD SOME Notes of a preliminary contract
1- We have a workshop for buses, equipped with the expertise required.
2 – After we get your agency, We WILL have Another workshops for the maintenance of other areas in the Kingdom spread east and west, south and north.
3 – We also have major exhibition (window-show) to showcase what we have from buses to the public, and we have also a vast area for our own buses.
4 – We have the necessary expertise of engineers and active employment, for good marketing and publicity that are necessary for of the Agency.
5 ? We would ask you for a year or at least 6 months, to study the market to know how much Buses and your other products we can market. And then decide together the quantities that we can withdraw annually for agency.
6 – And on these basis is determined by our physical treatment methods, the methods of payment between the client and the agent (or us).
7 – The need to ship spare parts necessary with the group of buses returned to the Kingdom for five years, the initial melodic does not arise any problem in obtaining the necessary spare parts with customers direct.
8 – Will also be studied how to participate the costs of the following between us in:
• Means of advertising and marketing.
• The compensation for errors which may arise in your production.
• Chinese Technician is need from your company under our sponsorship to take care and control the account things and secure maintenance and defects that may appear in buses and other necessities, even for the first year of marketing. OR :
WE CAN NEGOCIATED A NEW IDEA AS FOLLOW :
TO EXECUTE A LARGE FACTORY FOR ASSEMBLING AND MANUFACTUREING BUSES:
MY VIP CLIENTS ARE READY, ABLE AND CAN PAY THEIR PART IN A JOINT-0VENTURE WITH YOUR GOODSELVES AND FACILITATE ALL PROBLEMS IN THIS REGARDS EASILY.
THEY CAN Provide, equip, and to prepare the necessary building permits and approvals to the end of the procedures required for this subject. WAITING YOUR COMENTS. THANKS.
BY :
The mediator:
SINCERELY YOURS’,
MAHMOUD S. ADHAM
Address: AL-MADINAH AL-
MOUNAWARAH, Saudi Arabia.