- 23 Dec 09, 13:43#175733
http://news.bbc.co.uk/1/hi/business/8428066.stm
good or bad for Volvo's brand?
good or bad for Volvo's brand?Ford has agreed the terms of the sale of its Swedish business, Volvo Cars, to China's Geely.
Ford said "some work still remains to be completed" but the deal will be finalised early next year ahead of completion soon after Easter.
Ford put Volvo up for sale a year ago to help pay off its debt and make its business more focused.
Geely was named preferred bidder in November. If completed, it will be the largest purchase by a Chinese car firm.
Ford said that while the "substantive commercial terms" had been settled, financing still needed to be completed and government approval was also necessary.
VOLVO
First Volvo made in 1927
Bought by Ford in 1999
Employs 20,000 worldwide
In 2008 sales fell 18.3% to 374,297
The update on the sale is necessary for Geely to apply for government approval of the deal and with it, it is thought, the firm's financial backing.
No details were given of how much the deal is worth, but it is widely rumoured that Geely will pay Ford $2bn (£1.2bn; 1.4bn euros), less than a third of the $6.45bn Ford paid for Volvo in 1999.
Ford said it expects to continue co-operating with Volvo Cars, but did not intend to retain a shareholding in the business after the sale.
Benefits for all
Industry observers say the sale is good news for Volvo.
"In theory, the Chinese market could be an opportunity for Volvo," Nomura's auto specialist Michael Tyndall said.
"It's a well-known brand, has a good heritage and a range of products that should appeal to the Chinese consumer."
GEELY
Founded in 1986
Started as refrigerator parts supplier
Employs 12,000
Production capacity of 300,000 cars a year
Equally, the deal should help Geely get into the Western market.
It is thought that the main sticking point in the talks between Ford and Geely had been disagreement about how to deal with intellectual property rights - setting the parameters of Geely's use of Volvo's technology, such as its famous safety equipment, and the extent and cost of using any technology needed from Ford's research.
Moving to China
Professor David Bailey from the Coventry Business School said that he expects much of the Volvo production to be moved to China, which recently overtook the US to become the world's largest market for cars.
"I would expect development and research to remain in Sweden, and maybe some production, but the big scale production will probably come from China," he said.
"In the long run the question is whether they can continue to develop Volvo's safety profile and advanced engineering technology" he added.
Geely said that Volvo would continue to lead the trend of world auto technology in safety and environmental protection.
"It will quickly increase its unique competitive status in the Chinese market," the firm added.
Okay To a chinese company XD
