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As Volvo launches two new cars at the Frankfurt motor show, sources suggest that Ford may decide on the fate of its Swedish subsidiary within a month’s time. If so, expect to see Chinese automaker Geely Automotive bid for the brand.
“I believe if Volvo is for sale and Ford has a global announcement, then our parent company [Geely Holding Group] will participate,” Geely Automotive CEO Gui Shengyue told Automotive News.
Shengyue added that Geely will wait for Ford to make an announcement about the sale of Volvo, as the Chinese company wants to take full ownership of the Swedish brand instead of merely taking a stake in it.
“On the assumption that the parent company successfully acquires Volvo, Geely will fine tune the product line and technology until Volvo becomes profitable, and then inject the assets into the listed company,” said Vivien Chan, an auto analyst with Sinopac Securities. “It is definitely a long-term positive for the stock, but in the short term, there is no impact from the news.”
Geely Automotive is a privately owned automotive company, but is part of the larger publicly held Geely Holding Group. Some analysts have cast doubt on the ability of a privately held car company to turn around and manage an international brand such as Volvo, but Geely seems confident it’s up to the task.
Geely, along with several other Chinese car companies, has shown interest in entering the U.S. market, and acquiring Volvo would give the company a good entryway. The Chinese company is also working to upgrade its product line after previously selling the cheapest cars in China, and leveraging Volvo’s reputation for safety and luxury would certainly help.
“It’s a risky move,” said Ji Junfeng, an analyst at Changjiang Securities, “even though it may help raise Geely’s profile eventually.”
Source: Automotive News
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