Chinese car company acquires Volvo
China is set to become the world's leading car manufacturer as its leading private automobile organisation is buying Swedish brand Volvo in a billion pound deal.
It is reported in The Telegraph that Chinese company Geely could pay owner Ford less than $1.8bn for Volvo, putting China in good stead to overtake car production giants the US and Germany. This figure is considerably less than the estimated $6.5bn Ford paid for Volvo in 1999. However, in recent years Volvo has been making a significant loss year on year.
This new deal comes in the wake of Ford selling Aston Martin to a UK group for a rumoured £479 million, in a bid to concentrate on its own core brands. The Daily Mail comments that the recession saw Western car manufacturers suffering, with Chrysler succumbing in 2009 and European manufacturers seeing a decline in profits. Ford seems to be offloading non-core brands, so as to bolster their key business.
Nevertheless, emerging economies such as China were relatively unscathed, with the country becoming the largest car market in 2009, selling 13.6 million cars, overtaking the likes of the US.
Chief financial officer at Ford, Lewis Booth, commented on the deal, saying ''From a Ford point of view, we think it is a fair price for a good business. We are happy with the deal we have achieved with Geely.''
It is rumoured that Geely will develop the Chinese arm of Volvo further, rivalling it to the size of its European operations, offering greater choice and value for new car and eventually used car buyers across the world.
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