Geely gets Chinese central government support

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The Geely take over of Volvo has been nothing but rumor since early 2009, but now it looks like the plan is finally coming to fruitation with the prospect of Chinese built Volvo’s not being far behind:

From Reuters:

HONG KONG, Dec 31 (Reuters) – Geely, China’s No.1 private carmaker, said on Thursday that its parent company has strong support from the Chinese government to acquire Ford Motor’s (F.N) Volvo unit, and expects robust growth for China’s auto industry in 2010, also with help from Beijing.

“Without government support, the (Volvo) deal could not be done,” Gui Shengyue, chief executive of Geely Auto (0175.HK), said at a media briefing in Hong Kong on New Year’s Eve.

Last week, Ford said it was nearing an agreement to sell Volvo to Zhejiang Geely Holding Group, underscoring China’s arrival as a major force in the global auto industry.

Gui said he believed Zhejiang Geely Holding Group, parent of Hong Kong-listed Geely Auto, had financial support for the acquisition of Volvo.

Reuters reported on Dec. 1 that Geely was seeking at least $1 billion in loans to finance its $1.8 billion bid for Volvo, and that three major Chinese banks including one policy lender had agreed to offer the money. [ID:nHKG130867]

Geely Auto would be looking for opportunities to participate in the Volvo project once the acquisition is closed, Gui said.

“The ultimate goal is to inject Volvo into the listed company,” said Gui. However, he added that he could not predict when that goal would be realised.

BEIJING LOVES YOU

Home-grown Geely, which means “lucky” in Chinese, is hungry for modern, innovative technologies from the Swedish brand to upgrade its car lineup and tap China’s auto market, now the world’s biggest.

Besides Beijing’s support for Geely’s Volvo acquisition, Geely also benefits from the Chinese government’s subsidies policy, which will continue in 2010.

Anyone else looking forward to buying a Chinese built Volvo, or is it just us? More over, how will Chery cope now that their largest rival is about to get a massive injection in knowledge which will give them a leap into the 21st century and beyond thanks to Volvo technology. Chery have said before that they wish to remain independent and wont chase brands, but perhaps this is only going to leave them behind.