Since early 2009 we have constantly hear rumours that Geely are planning to take over Volvo from Ford, eventually in late 2009 the deal was announced; Geely would become Volvo’s new master. A final price hasn’t been announced, but it is expected to be somewhere in the range from 1.5 billion to 2 billion RMB, considerably less than the 6 billion USD that Ford originally paid for Volvo.
The wording of the Volvo-Geely deal has yet to be finally announced, but some insider information that was leaked to the Chinese internet earlier today claims that:
- Geely gets 9 products – S40, S60, S80, C70, C30, XC90, XC60, V50, V70
- Three platforms – P1, P2, P24. The P1 platform is especially for compact cars, whilst the P2 platform is for larger sized cars
- A worldwide dealership network of 2000 dealers
- Access to Volvo supply chain, which will guarantee quality and delivery of products
- All Volvo branding
The shopping list is fantastic for Geely, and will raise it from being a backwater car maker to an international player overnight. Geely are apparently hoping for world Volvo sales to hit 2 million units per year worldwide in the next 4 to 5 years, but in the meantime they are apparently aiming for sales of 1 million globally. Currently global sales of Volvo cars are at around 400,000 units, whilst China only accounts for a mere 13,000 cars. Geely are planning to give Volvo their biggest lease of life here in China by giving Volvo some more Chinese ‘design elements’ to make it more popular with local tastes, which doesn’t just mean they’ll be stretching yet more wheelbases to appeal to the Audi A4L crowd.
Financially speaking, Geely are apparently aiming to make a profit from Volvo within a year of ownership, and before 2015 they are aiming to get their investment in Volvo back.
I am skeptical on the accuracy of this report.
For one thing, Geely will have to rebuild the supplier chain because a lot of Volvo suppliers are threatening to pull out and tear up Volvo supply contract out of fear of Geely’s intellectual property abuse.
Normally, automakers gain access to drawings of parts they are buying and promise to keep them secret on confidentiality bases, but Volvo suppliers fear that Geely would transfer those drawings to Chinese suppliers to produce knock-off parts. For suppliers, Volvo business is not large enough to risk leaking their trade secret to Geely and Geely’s Chinese suppliers.
So the first thing Geely will find when it enters Volvo HQ after takeover is that all the supplier drawings have been destroyed, and suppliers refuse to supply them.
I presume that powertrain tech is included under platforms?
The P24 is a midsized car platform – it is basically a stretched P1. It is used for the current S80 and next-gen S60. This platform is also known as EUCD on the Ford side, where it is used for the S-MAX, Galaxy, and current Mondeo.
The P2 is an older platform, which was designed solely by Volvo (prior to Ford taking ownership).
Geely is only step behind developing a mercedes class product .
Chinese companies has always relied on their strength and skills to develop and design all the vehicles .Learning from good design of others is not a case of copyright infringement
Volvo suppliers will not run anywhere since they will get exposure to huge chinese markets and rely on the strength of the Geely to make profit in these tough times.
Good Luck Geely.
Geely will have no problem managing Volvo. Congrats on becoming an international player in literally one night.
Geely makes the worst automobiles on the planet.
http://autonews.gasgoo.com/auto-news/5713/China-s-Geely-flunks-Russian-crash-test.html
http://www.chinacartimes.com/2008/02/04/geely-death-vessel/
http://www.youtube.com/watch?v=2aL-xaFLeEo
The difference shall be labor costs, of course. In China, an assembler is paid what, 40 cents U.S. an hour? No health insurance, no pension, no care or anything. In Sweden, what can a Volvo assembler earn? 35 and more dollars U.S. an hours not including the health insurance, pension, and taxes. So, cheap labor.
If the supply chain for Geely-Chinese-Volvo uses Chinese made materials, well have an automobile of exceptionally poor quality. The quality of Chinese steel is deplorable. Even aluminum manufactured in China is nearly awful, unless the parent corporation or customer shadows and controls the made in China effort to ensure a made in Thailand, Taiwan, or Singapore quality. Consider what HP has to accomplish when they move a newly products assembly from Vancouver, WA, USA to Singapore. HP’s effort are controlled and allow nothing to chance. If left to their own devices, Chinese manufacturing shall continue to sell extremely poor product of no value, tainted with hazardous chemical, like that found in pet food and children’s toys sold to the U.S. in the last few years.
No, a Volvo not made in Sweden, Belgium, Holland, or Halifax, Canada (is that facility still open?), that is NO Volvo. Call it Chinese junk.
The spirits of the great industrialists Assar Thorvald Nathanael Gabrielsson and Erik Gustaf Larson, I’m sure, were sickened to see Volvo Cars sold off from the Volvo Group AB. In selling Volvo Cars AB to China, I’m sure the regret ever creating Volvo.
Volvo automobiles have saved my life twice. If China doesn’t live up to those standards–Boron cages, crush zones–then forget it. I would rather drive a Chevy truck than a Chinese Volvo. Tragic.
They might sell more Volvos in China because of this, but the rest of the world still will not trust any Chinese company with something as important as their family’s safety. All it will take is one tiny slip-up and the days of Volvo being known as safe, good-quality cars among “Westerners” will be over extremely quickly. Geely needs to basically let Volvo handle the development of the cars or Geely will effectively end up making cars that will only be sold in the domestic Chinese market, just as before the deal.
U.S imperialism is stuffing up europe. Quick buck for the the few rich.Of course it cant last for ever. Us little people should stop buying products made by asia. We all know that the soul of volvo and other products are lost when taken over by giants.My next car will just have to be volkswagon i guess.
Jaye that will be Geelys biggest challenge next to keeping Volvo afloat. If heavy cost cutting takes place to permit the latter, then the renowned safety standard may be compromised.
Un altro pezzo di storia automobilistica tramonta!! Io sono certo che la GEELY lascerà ampie autonomie agli svedesi, ma una VOLVO di proprietà cinese non è più la stessa cosa!! E’ un peccato che la FORD in questi oltre 10 anni di proprietà non sia riuscita a valorizzare le grandi capacità della VOLVO nel settore delle auto di alto di gamma!! Probabilmente non faceva per loro produrre auto di categoria superiore (vedi pure la cessione della Jaguar). Eppure spazio per auto di alta gamma ce ne! Basta vedere i giapponesi, che pure non avendoli, si sono inventati, e con successo, marchi di lusso come LEXUS, INFINITI e AMATI!! Uno zero spaccato come voto alla FORD e, aggiungo, idem alla GENERAL MOTORS per l’analoga vicenda SAAB, altro marchio gestito con tanta incapacità !!! Tutto ciò non può far altro che agevolare il mercato di AUDI, BMW e MERCEDS: loro si che non sbagliano un colpo!!! A loro un 10 e lode!!